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Are Pollution Permit Markets Harmful for Employment?

Author

Listed:
  • Nicolas Sanz

    (CEREGMIA, Université des Antilles et de la Guyane)

  • Sonia Schwartz

    (CAE, Université Paul Cézanne)

Abstract

This paper investigates if pollution permit markets are harmful for employment within a Wage Setting-Price Setting (WS-PS) model. The employment level is determined according to several financing unemployment benefits: a wage tax or the revenue of the pollution permit auction. We first show that a permit market weakens the union market power. Whatever the way that unemployment benefits are financed, the choice of the pollution cap is always neutral on the employment levels, and these latter always increase if the technology to reduce pollution become more efficient. Depending on the value of the wage tax, the employment level can be higher or lower when unemployment benefits are financed by pollution permits rather than a wage tax.

Suggested Citation

  • Nicolas Sanz & Sonia Schwartz, 2011. "Are Pollution Permit Markets Harmful for Employment?," Documents de Travail 2011-04, CEREGMIA, Université des Antilles et de la Guyane.
    • Handle: RePEc:crg:wpaper:dt2011-04
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    File URL: http://www2.univ-ag.fr/RePEc/DT/DT2011-04_Sanz_Schwartz.pdf
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    Cited by:

    1. is not listed on IDEAS
    2. Xavier Pautrel, 2018. "Environmental Policy and Health in the Presence of Labor Market Imperfections," TEPP Working Paper 2018-09, TEPP.
    3. Shi, Beibei & Jiang, Lisha & Bao, Rui & Zhang, Ziqing & Kang, YuanQi, 2023. "The impact of insurance on pollution emissions: Evidence from China's environmental pollution liability insurance," Economic Modelling, Elsevier, vol. 121(C).
    4. Yusen Gao & Changsheng Hu & Yue Yang, 2022. "Will tougher environmental policy reduce the employment of industrial enterprises? The heterogeneity analysis based on enterprise level and city level," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1810-1834, September.

    More about this item

    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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