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Economic Growth, Inequality, Democratization, and the Environment

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  • Eriksson, Clas

    ()
    (Department of Economics)

  • Persson, Joakim

    (Trade Union Institute for Economic Research)

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    Abstract

    We augment the Stokey (1998) model by allowing agents to differ with respect to environmental quality and income in order to analyze the impact of income and environmental inequality, and of democratization on aggregate pollution. We find that the impact of a more equal income distribution depends on the degree of democracy. In a complete democracy a more equal income distribution generates, ceteris paribus, less pollution, which is consistent with indirect empirical evidence, whereas the opposite is the case if democratic rights are highly restricted. Further-more, a democratization is argued to typically lower both the income and the environmental quality of the median voter. In this case, if, in utility terms, the fall in environmental quality is worse than the fall in consumption the median voter decides to tighten environmental legislation so that aggregate pollution decreases.

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    File URL: http://swopec.hhs.se/fiefwp/papers/WP178.pdf
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    Bibliographic Info

    Paper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number 178.

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    Length: 21 pages
    Date of creation: 16 Aug 2002
    Date of revision:
    Publication status: Published in Environmental and Resource Economics, 2003, pages 1-16.
    Handle: RePEc:hhs:fiefwp:0178

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    Keywords: Economic growth and the environment; inequality; politics;

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