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Wealth Heterogeneity and Escape from the Poverty-Environment Trap

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  • Masako Ikefuji

    ()
    (Graduate School of Economics, Osaka University)

  • Ryo Horii

    ()
    (Graduate School of Economics, Osaka University)

Abstract

A mutual link between poverty and environmental degradation is examined in an overlapping generations model with environmental externality, human capital, and credit constraints. Environmental quality affects labor productivity and thus wealth dynamics, whereas wealth distribution determines the degree to which agents rely upon natural resources and therefore the evolution of environmental quality. This interaction creates a epoverty-environment trap,' where a deteriorated environment lowers income, which in turn accelerates environmental degradation. We show that greater wealth heterogeneity is the key to escaping the poverty-environment trap, although it has negative effects both on the environment and output when not in the trap.

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File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0509.pdf
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Bibliographic Info

Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 05-09.

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Length: 30 pages
Date of creation: May 2005
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Handle: RePEc:osk:wpaper:0509

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Web page: http://www.econ.osaka-u.ac.jp/
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Keywords: Poverty trap; Environmental degradation; Wealth distribution; Human capital.;

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  1. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
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Citations

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Cited by:
  1. Mariani, Fabio & Pérez-Barahona, Agustín & Raffin, Natacha, 2009. "Life Expectancy and the Environment," IZA Discussion Papers 4564, Institute for the Study of Labor (IZA).
  2. repec:hal:journl:halshs-00384500 is not listed on IDEAS
  3. repec:hal:journl:halshs-00492178 is not listed on IDEAS
  4. Hamdani, Nisar Hussain & Shah, Syed Akhter Hussain, 2005. "Earthquake 2005: Some Implications for Environment and Human Capital," MPRA Paper 9519, University Library of Munich, Germany.
  5. Emeline Bezin, 2013. "The dynamics of environmental concern and the evolution of pollution," Working Papers SMART - LERECO 13-09, INRA UMR SMART.
  6. Constant, Karine & Nourry, Carine & Seegmuller, Thomas, 2014. "Population growth in polluting industrialization," Resource and Energy Economics, Elsevier, vol. 36(1), pages 229-247.
  7. Thomas Bassetti & Nikos Benos & Stelios Karagiannis, 2013. "CO 2 Emissions and Income Dynamics: What Does the Global Evidence Tell Us?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 54(1), pages 101-125, January.
  8. Bhattacharya, Haimanti & Innes, Robert, 2006. "Is There a Nexus between Poverty and Environment in Rural India?," 2006 Annual meeting, July 23-26, Long Beach, CA 21201, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  9. Eugenia Vella & Evangelos Dioikitopoulos & Sarantis Kalyvitis, . "Green Spending Reforms, Growth and Welfare with Endogenous Subjective Discounting," DEOS Working Papers 1335, Athens University of Economics and Business.
  10. Ryo Horii & Masako Ikefuji, 2014. "Environment and Growth," Working Papers 2014.37, Fondazione Eni Enrico Mattei.

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