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Is Inequality Harmful for the Environment in a Growing Economy?

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Author Info

  • Hubert Kempf

    (Université Paris-1 Panthéon Sorbonne)

  • Stéphane Rossignol

    (Université de Versailles, and EUREQua Université Paris-1 Panthéon-Sorbonne)

Abstract

In this paper we investigate the relationship between inequality and the environment in a growing economy from a political economy perspective. We consider an endogenous growth economy, where growth generates pollution and a deterioration of the environment. Public expenditures may either be devoted to supporting growth or abating pollution. The decision over the public programs is done in a direct democracy, with simple majority rule. We prove that the median voter is decisive and show that inequality is harmful for the environment: the poorer the median voter relative to the average individual, the less she will tax and devote resources to the environment, preferring to support growth.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2005.5.

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Date of creation: Jan 2005
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Handle: RePEc:fem:femwpa:2005.5

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Keywords: Inequality; Environment; Pollution abatement policy; Growth; Political economy;

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References

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  1. Fiaschi, Davide, 1999. "Growth and inequality in an endogenous fiscal policy model with taxes on labor and capital," European Journal of Political Economy, Elsevier, vol. 15(4), pages 727-746, November.
  2. Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
  3. Garcia-Penalosa, Cecilia & Aghion, Philippe & Caroli, Eve, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Economics Papers from University Paris Dauphine 123456789/10091, Paris Dauphine University.
  4. Magnani, Elisabetta, 2000. "The Environmental Kuznets Curve, environmental protection policy and income distribution," Ecological Economics, Elsevier, vol. 32(3), pages 431-443, March.
  5. Alesina, Alberto F & Rodrik, Dani, 1991. "Distributive Politics and Economic Growth," CEPR Discussion Papers 565, C.E.P.R. Discussion Papers.
  6. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  7. Torras, Mariano & Boyce, James K., 1998. "Income, inequality, and pollution: a reassessment of the environmental Kuznets Curve," Ecological Economics, Elsevier, vol. 25(2), pages 147-160, May.
  8. Hirtle, Beverly, 2009. "Credit derivatives and bank credit supply," Journal of Financial Intermediation, Elsevier, vol. 18(2), pages 125-150, April.
  9. Kahn, Matthew E & Matsusaka, John G, 1997. "Demand for Environmental Goods: Evidence from Voting Patterns on California Initiatives," Journal of Law and Economics, University of Chicago Press, vol. 40(1), pages 137-73, April.
  10. van Marrewijk, Charles & van der Ploeg, Federick & Verbeek, Jos, 1993. "Is growth bad for the environment? Pollution, abatement, and endogenous growth," Policy Research Working Paper Series 1151, The World Bank.
  11. Larry E. Jones & Rodolfo E. Manuelli, 2001. "Endogenous Policy Choice: The Case of Pollution and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 369-405, July.
  12. Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, vol. 8(3), pages 329-340, December.
  13. Hubert Kempf & Stéphane Rossignol, 2005. "Growth, Inequality, and Integration: A Political Economy Analysis," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(5), pages 709-739, December.
  14. Andreoni, James & Levinson, Arik, 2001. "The simple analytics of the environmental Kuznets curve," Journal of Public Economics, Elsevier, vol. 80(2), pages 269-286, May.
  15. Perotti, Roberto, 1996. " Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
  16. Earnhart, Dietrich, 1997. "Enforcement of Environmental Protection Laws under Communism and Democracy," Journal of Law and Economics, University of Chicago Press, vol. 40(2), pages 377-402, October.
  17. Marsiliani, L. & Renstrom, T.I., 2000. "Inequality, Environmental Protection and Growth," Discussion Paper 2000-34, Tilburg University, Center for Economic Research.
  18. Krusell, Per & Quadrini, Vincenzo & Rios-Rull, Jose-Victor, 1997. "Politico-economic equilibrium and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 243-272, January.
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Citations

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Cited by:
  1. Hubert Kempf & Stéphane Rossignol, 2010. "National Politics and International Agreements," Documents de travail du Centre d'Economie de la Sorbonne 10052, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  2. Nguyen-Van, Phu & Pham, Thi Kim Cuong, 2013. "Endogenous fiscal policies, environmental quality, and status-seeking behavior," Ecological Economics, Elsevier, vol. 88(C), pages 32-40.
  3. Anesi, Vincent & De Donder, Philippe, 2008. "Secondary Issues and Party Politics: An Application to Environmental Policy," CEPR Discussion Papers 6774, C.E.P.R. Discussion Papers.
  4. Francesco Vona & Francesco Nicolli, 2013. "Energy market liberalisation and renewable energy policies in oecd countries," Documents de Travail de l'OFCE 2013-10, Observatoire Francais des Conjonctures Economiques (OFCE).
  5. Francesco Vona & Fabrizio Patriarca, 2010. "Income Inequality and the Development of Environmental Technologies," Documents de Travail de l'OFCE 2010-22, Observatoire Francais des Conjonctures Economiques (OFCE).
  6. Kirill Borissov & Thierry Brechet & Stephane Lambrecht, 2012. "Environmental maintenance in a dynamic model with heterogenous agents," CEEES Paper Series CE3S-02/12, European University at St. Petersburg, Department of Economics.
  7. Kirill Borissov & Thierry Bréchet & Stéphane Lambrecht, 2012. "Environmental Maintenance in a Dynamic Model with Heterogenous Agents," Working Papers hal-00989799, HAL.
  8. repec:spo:wpecon:info:hdl:2441/f6h8764enu2lskk9p544jc8op is not listed on IDEAS
  9. Francesco Nicolli & Francesco Vona, 2012. "The evolution of renewable energy policy in Oecd countries:aggregate indicators and determinants," Documents de Travail de l'OFCE 2012-13, Observatoire Francais des Conjonctures Economiques (OFCE).

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