Wealth Heterogeneity and Escape from the Poverty-Environment Trap
AbstractA 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 `poverty-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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Bibliographic InfoPaper provided by EconWPA in its series Development and Comp Systems with number 0505001.
Length: 28 pages
Date of creation: 02 May 2005
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Poverty trap; Environmental degradation; Wealth distribution; Human capital.;
Other versions of this item:
- Masako Ikefuji & Ryo Horii, 2007. "Wealth Heterogeneity and Escape from the Poverty-Environment Trap," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(6), pages 1041-1068, December.
- Masako Ikefuji & Ryo Horii, 2005. "Wealth Heterogeneity and Escape from the Poverty-Environment Trap," Discussion Papers in Economics and Business 05-09, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-05-07 (All new papers)
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