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Pollution effects on labor supply and growth

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  • Stefano Bosi
  • David Desmarchelier
  • Lionel Ragot

Abstract

Some recent empirical contributions have pointed out a significant negative impact of pollution on labor supply. These impacts have been largely ignored in the theoretical literature, which, instead, focused on the case of pollution effects on consumption demand. In this paper, we study the short and long-run effects of pollution in a Ramsey model where pollution and labor supply are nonseparable arguments in households’ preferences. We determine sufficient conditions for existence and uniqueness of a longterm equilibrium and we show how large (negative) effects of pollution on labor supply may promotes macroeconomic volatility (deterministic cycles near the steady state) through a flip bifurcation.

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Bibliographic Info

Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2014-34.

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Length: 17 pages
Date of creation: 2014
Date of revision:
Handle: RePEc:drm:wpaper:2014-34

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Keywords: pollution; endogenous labor supply; Ramsey model.;

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  1. Frederick Ploeg & Cees Withagen, 1991. "Pollution control and the Ramsey problem," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 1(2), pages 215-236, June.
  2. de Bovenberg, A Lans & Mooij, Ruud A, 1994. "Environmental Levies and Distortionary Taxation," American Economic Review, American Economic Association, American Economic Association, vol. 84(4), pages 1085-89, September.
  3. Philippe Michel & Gilles Rotillon, 1995. "Disutility of pollution and endogenous growth," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 6(3), pages 279-300, October.
  4. Tahvonen Olli & Kuuluvainen Jari, 1993. "Economic Growth, Pollution, and Renewable Resources," Journal of Environmental Economics and Management, Elsevier, vol. 24(2), pages 101-118, March.
  5. Richard Carson & Phoebe Koundouri & Celine Nauges, . "Arsenic Mitigation in Bangladesh: A Household Labor Market Approach," DEOS Working Papers 1130, Athens University of Economics and Business.
  6. Joshua Graff Zivin & Matthew J. Neidell, 2010. "Temperature and the Allocation of Time: Implications for Climate Change," NBER Working Papers 15717, National Bureau of Economic Research, Inc.
  7. Wolfram Schlenker & W. Reed Walker, 2011. "Airports, Air Pollution, and Contemporaneous Health," NBER Working Papers 17684, National Bureau of Economic Research, Inc.
  8. Thomas Seegmuller & Alban Verchère, 2007. "A Note on Indeterminacy in Overlapping Generations Economies with Environment and Endogenous Labor Supply," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00194230, HAL.
  9. Joshua S. Graff Zivin & Matthew J. Neidell, 2011. "The Impact of Pollution on Worker Productivity," NBER Working Papers 17004, National Bureau of Economic Research, Inc.
  10. Rema Hanna & Paulina Oliva, 2011. "The Effect of Pollution on Labor Supply: Evidence from a Natural Experiment in Mexico City," NBER Working Papers 17302, National Bureau of Economic Research, Inc.
  11. Junxi Zhang, 1999. "Environmental sustainability, nonlinear dynamics and chaos," Economic Theory, Springer, Springer, vol. 14(2), pages 489-500.
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