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Environmental Policy, Education And Growth: A Reappraisal When Lifetime Is Finite

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  • Pautrel, Xavier

Abstract

This article demonstrates that when finite lifetime is introduced in a Lucas (1988) growth model where the source of pollution is physical capital, the environmental policy may enhance the growth rate of a market economy, while pollution does not influence educational activities, labor supply is not elastic and human capital does not enter the utility function. The result arises from the “generational turnover effect” due to finite lifetime. It remains valid under conditions when the education sector uses final output besides time to accumulate human capital. Nevertheless, it does no longer hold when the source of pollution is output. Furthermore, this article demonstrates that ageing reduces the positive influence of the environmental policy when growth is driven by human capital accumulation à la Lucas (1988) and lifetime is finite. It also confirms for finite lifetime the result found by Vellinga (1999) with a single representative agent: environmental care does not influence optimal growth when utility is additive and pollution does not influence the ability of agents to be educated.
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  • Pautrel, Xavier, 2012. "Environmental Policy, Education And Growth: A Reappraisal When Lifetime Is Finite," Macroeconomic Dynamics, Cambridge University Press, vol. 16(05), pages 661-685, November.
  • Handle: RePEc:cup:macdyn:v:16:y:2012:i:05:p:661-685_00
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    Cited by:

    1. Karine Constant & Marion Davin, 2014. "Environmental Policy and Growth in a Model with Endogenous Environmental Awareness," AMSE Working Papers 1405, Aix-Marseille School of Economics, Marseille, France, revised Mar 2014.
    2. Pautrel, Xavier, 2009. "Pollution and life expectancy: How environmental policy can promote growth," Ecological Economics, Elsevier, vol. 68(4), pages 1040-1051, February.
    3. Carraro, Carlo & De Cian, Enrica & Tavoni, Massimo, 2012. "Human Capital, Innovation, and Climate Policy: An Integrated Assessment," CEPR Discussion Papers 8919, C.E.P.R. Discussion Papers.
    4. Carlo Carraro & Enrica De Cian & Lea Nicita, 2009. "Modeling Biased Technical Change. Implications For Climate Policy," Working Papers 2009_27, Department of Economics, University of Venice "Ca' Foscari".
    5. Ott, Ingrid & Soretz, Susanne, 2015. "Green attitude and economic growth," Working Paper Series in Economics 68, Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering.
    6. Chu, Hsun & Lai, Ching-chong & Liao, Chih-hsing, 2016. "A Note On Environment-Dependent Time Preferences," Macroeconomic Dynamics, Cambridge University Press, pages 1652-1667.
    7. Basseti, Thomas & Benos, Nikos & Karagiannis, Stelios, 2010. "How policy can influence human capital accumulation and environment quality," MPRA Paper 21754, University Library of Munich, Germany.
    8. Xavier Pautrel, 2015. "Abatement Technology and the Environment–Growth Nexus with Education," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 297-318.
    9. Kirschbaum, Birgit & Soretz, Susanne, 2017. "Human capital, pollution control, and endogenous growth," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168186, Verein für Socialpolitik / German Economic Association.
    10. Carlo Carraro & Enrica De Cian & Massimo Tavoni, 2009. "Human Capital Formation and Global Warming Mitigation: Evidence from an Integrated Assessment Model," CESifo Working Paper Series 2874, CESifo Group Munich.

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    JEL classification:

    • C - Mathematical and Quantitative Methods
    • O - Economic Development, Innovation, Technological Change, and Growth

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