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Labor Supply And Growth Effects Of Environmental Policy Under Technological Risk

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  • Clemens, Christiane
  • Pittel, Karen

Abstract

This paper analyzes the effects of technological risk on long-run growth when labor supply is elastic and production gives rise to a pollution externality. We show that the randomness of production, as well as the endogeneity of labor supply, affects the equilibrium solutions for the social planner and for the market economy. We analyze the effects of environmental policy, discuss conditions for an optimal policy, and find that the response of labor supply to changes in the model parameters and to variations in the policy instruments crucially depends on the volatility of output.

Suggested Citation

  • Clemens, Christiane & Pittel, Karen, 2011. "Labor Supply And Growth Effects Of Environmental Policy Under Technological Risk," Macroeconomic Dynamics, Cambridge University Press, vol. 15(1), pages 31-59, February.
    • Handle: RePEc:cup:macdyn:v:15:y:2011:i:01:p:31-59_99
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    Cited by:

    1. Lucas Bretschger & Susanne Soretz, 2022. "Stranded Assets: How Policy Uncertainty affects Capital, Growth, and the Environment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 83(2), pages 261-288, October.
    2. Dimitrios Varvarigos, 2013. "Economic Growth, Health, and the Choice of Polluting Technologies: The Role of Bureaucratic Corruption," Discussion Papers in Economics 13/22, Division of Economics, School of Business, University of Leicester.

    More about this item

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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