IDEAS home Printed from https://ideas.repec.org/a/bla/ijethy/v21y2025i2p165-176.html

The impact of environmental protection on urbanization

Author

Listed:
  • Shang‐Fen Wu
  • Cheng‐Te Lee

Abstract

This paper develops a small open Harris‐Todaro model with intersectoral capital mobility and the negative externality of pollution to analyze the effects of the pollution tax on urbanization and GDP. We demonstrate that an increase in the pollution tax leads to a decrease in the level of urbanization. Furthermore, we show that if the ratio of the production value of manufactured goods to GDP is smaller than the ratio of the production value of agricultural goods to GDP, then a rise in the pollution tax results in an increase in GDP.

Suggested Citation

  • Shang‐Fen Wu & Cheng‐Te Lee, 2025. "The impact of environmental protection on urbanization," International Journal of Economic Theory, The International Society for Economic Theory, vol. 21(2), pages 165-176, June.
    • Handle: RePEc:bla:ijethy:v:21:y:2025:i:2:p:165-176
    DOI: 10.1111/ijet.12421
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ijet.12421
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ijet.12421?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kuo‐Hsing Kuo & Shang‐Fen Wu & Cheng‐Te Lee, 2022. "The impact of environmental policy on wage inequality," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(4), pages 472-485, December.
    2. Oyvat, Cem, 2016. "Agrarian Structures, Urbanization, and Inequality," World Development, Elsevier, vol. 83(C), pages 207-230.
    3. Jiancai Pi & Shenyu Shi, 2019. "Public pollution abatement and wage inequality," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(2), pages 257-275, February.
    4. Pi, Jiancai & Zhang, Pengqing, 2017. "Foreign capital, pollution control, and wage inequality in developing countries," International Review of Economics & Finance, Elsevier, vol. 48(C), pages 280-288.
    5. Sebastian Gechert & Tomas Havranek & Zuzana Irsova & Dominika Kolcunova, 2022. "Measuring Capital-Labor Substitution: The Importance of Method Choices and Publication Bias," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 55-82, July.
    6. Ichiroh Daitoh, 2003. "Environmental Protection and Urban Unemployment: Environmental Policy Reform in a Polluted Dualistic Economy," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 496-509, August.
    7. Dogan, Eyup & Hodžić, Sabina & Šikić, Tanja Fatur, 2023. "Do energy and environmental taxes stimulate or inhibit renewable energy deployment in the European Union?," Renewable Energy, Elsevier, vol. 202(C), pages 1138-1145.
    8. Ronald W. Jones, 2018. "The Structure of Simple General Equilibrium Models," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 4, pages 61-84, World Scientific Publishing Co. Pte. Ltd..
    9. Xu, Ye & Wen, Shuang & Tao, Chang-Qi, 2023. "Impact of environmental tax on pollution control: A sustainable development perspective," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 89-106.
    10. Sato, Yasuhiro & Zenou, Yves, 2015. "How urbanization affect employment and social interactions," European Economic Review, Elsevier, vol. 75(C), pages 131-155.
    11. Michael Knoblach & Martin Roessler & Patrick Zwerschke, 2020. "The Elasticity of Substitution Between Capital and Labour in the US Economy: A Meta‐Regression Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(1), pages 62-82, February.
    12. Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 160-169, February.
    13. McGuire, Martin C., 1982. "Regulation, factor rewards, and international trade," Journal of Public Economics, Elsevier, vol. 17(3), pages 335-354, April.
    14. Jiancai Pi & Xinyi Liu, 2024. "Pollution control and multinational firms," International Journal of Economic Theory, The International Society for Economic Theory, vol. 20(1), pages 3-27, March.
    15. Chi‐Chur Chao & Joe R. Kerkvliet & Eden S. H. Yu, 2000. "Environmental Preservation, Sectoral Unemployment, and Trade in Resources," Review of Development Economics, Wiley Blackwell, vol. 4(1), pages 39-50, February.
    16. Seidel, Tobias & Wickerath, Jan, 2020. "Rush hours and urbanization," Regional Science and Urban Economics, Elsevier, vol. 85(C).
    17. Song, Huasheng & Thisse, Jacques-François & Zhu, Xiwei, 2012. "Urbanization and/or rural industrialization in China," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 126-134.
    18. Ichiroh Daitoh & Masaya Omote, 2011. "The Optimal Environmental Tax and Urban Unemployment in an Open Economy," Review of Development Economics, Wiley Blackwell, vol. 15(1), pages 168-179, February.
    19. Rapanos, Vassilis T., 2007. "Environmental taxation in a dualistic economy," Environment and Development Economics, Cambridge University Press, vol. 12(1), pages 73-89, February.
    20. Song, Yan & Zenou, Yves, 2006. "Property tax and urban sprawl: Theory and implications for US cities," Journal of Urban Economics, Elsevier, vol. 60(3), pages 519-534, November.
    21. Ichiroh Daitoh, 2008. "Environmental Protection and Trade Liberalization in a Small Open Dual Economy," Review of Development Economics, Wiley Blackwell, vol. 12(4), pages 728-736, November.
    22. Cai, Yongyang & Selod, Harris & Steinbuks, Jevgenijs, 2018. "Urbanization and land property rights," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 246-257.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shang‐Fen Wu & Cheng‐Te Lee, 2026. "Trade Liberalization, Pollution Tax, Skilled Immigration, and Wage Inequality," Bulletin of Economic Research, Wiley Blackwell, vol. 78(3), pages 665-671, July.
    2. Kuo†Hsing Kuo & Cheng†Te Lee & Shang†Fen Wu, 2018. "Environmental Policy And Labour Market Imperfection," Bulletin of Economic Research, Wiley Blackwell, vol. 70(2), pages 175-184, April.
    3. Kuo‐Hsing Kuo & Shang‐Fen Wu & Cheng‐Te Lee, 2022. "The impact of environmental policy on wage inequality," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(4), pages 472-485, December.
    4. Sheng-Huei Ko & Kuo-Hsing Kuo & Cheng-Te Lee & Chen Fang, 2017. "Environmental Tax And Return Urban–Rural Migration," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(02), pages 447-458, June.
    5. Ichiroh Daitoh & Nori Tarui, 2016. "Open-access Renewable Resources and Urban Unemployment: Dual Institutional Failures in a Small Open Economy," Keio-IES Discussion Paper Series 2016-009, Institute for Economics Studies, Keio University.
    6. Daitoh, Ichiroh & Tarui, Nori, 2022. "Open access renewable resources, urban unemployment, and the resolution of dual institutional failures," Environment and Development Economics, Cambridge University Press, vol. 27(4), pages 316-332, August.
    7. Chen, Tai-Liang & Yang, Mingjie & Zou, Yuxiang, 2025. "Carbon emission control, tariff-carbon tax reform and intersectoral migration in the presence of international capital inflows," The North American Journal of Economics and Finance, Elsevier, vol. 78(C).
    8. Pengqing Zhang, 2024. "Pollution control, worker productivity, and wage inequality," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 72(4), pages 1105-1128, April.
    9. Li, Xiaochun & Xu, Yuanting & Wang, Dianshuang, 2014. "Environment and labor movement of skilled labor and unskilled labor between sectors," Economic Modelling, Elsevier, vol. 38(C), pages 367-371.
    10. Leonard F. S. Wang & Ji Sun, 2023. "Corporate profit tax, firm entry with unemployment, and income inequality," Bulletin of Economic Research, Wiley Blackwell, vol. 75(2), pages 380-392, April.
    11. Ichiroh Daitoh, 2003. "Environmental Protection and Urban Unemployment: Environmental Policy Reform in a Polluted Dualistic Economy," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 496-509, August.
    12. Arief Anshory Yusuf, 2005. "Who Pay for the Cleaner Air? Distributional Impact of Environmental Policy in a Dualistic Economy," Working Papers in Economics and Development Studies (WoPEDS) 200502, Department of Economics, Padjadjaran University, revised Feb 2005.
    13. Sturm, Daniel & Ulph, Alistair, 2002. "Environment, trade, political economy and imperfect information: a survey," Discussion Paper Series In Economics And Econometrics 0204, Economics Division, School of Social Sciences, University of Southampton.
    14. Yunyun Wu & Xiaochun Li, 2024. "Industrial technological progress, technology spillover, and the environment in a dual agricultural economy," International Journal of Economic Theory, The International Society for Economic Theory, vol. 20(2), pages 243-266, June.
    15. Robert E. Kohn, 1991. "Global Pollution: A Heckscher-Ohlin-Samuelson Model of Pigouvian Taxation," Eastern Economic Journal, Eastern Economic Association, vol. 17(3), pages 337-343, Jul-Sep.
    16. Sunghoon Chung, 2012. "Environmental Regulation and the Pattern of Outward FDI: An Empirical Assessment of the Pollution Haven Hypothesis," Departmental Working Papers 1203, Southern Methodist University, Department of Economics.
    17. Amitrajeet A. Batabyal, 1996. "Game models of environmental policy in an open economy," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 30(2), pages 185-200.
    18. Zaman, Rubaiya, 2012. "CO2 Emissions, Trade Openness and GDP Percapita : Bangladesh Perspective," MPRA Paper 48515, University Library of Munich, Germany.
    19. M. Ali Khan, 2007. "The Harris-Todaro Hypothesis," PIDE-Working Papers 2007:16, Pakistan Institute of Development Economics.
    20. Kozloff, Keith & Runge, C. Ford, 1991. "International Trade In The Food Sector And Environmental Quality, Health, And Safety: A Survey Of Policy Issues," Staff Papers 13325, University of Minnesota, Department of Applied Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ijethy:v:21:y:2025:i:2:p:165-176. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1742-7355 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.