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Pollution effects on labor supply and growth

  • Stefano Bosi
  • David Desmarchelier
  • Lionel Ragot

Some recent empirical contributions have pointed out a significant negative impact of pollution on labor supply. These impacts have been largely ignored in the theoretical literature, which, instead, focused on the case of pollution effects on consumption demand. In this paper, we study the short and long-run effects of pollution in a Ramsey model where pollution and labor supply are nonseparable arguments in households’ preferences. We determine sufficient conditions for existence and uniqueness of a longterm equilibrium and we show how large (negative) effects of pollution on labor supply may promotes macroeconomic volatility (deterministic cycles near the steady state) through a flip bifurcation.

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File URL: http://economix.fr/pdf/dt/2014/WP_EcoX_2014-34.pdf
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Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2014-34.

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Length: 17 pages
Date of creation: 2014
Date of revision:
Handle: RePEc:drm:wpaper:2014-34
Contact details of provider: Postal: 200 Avenue de la République, Bât. G - 92001 Nanterre Cedex
Web page: http://economix.fr
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  1. Richard T. Carson & Phoebe Koundouri & NAUGES Céline, 2009. "Arsenic Mitigation in Bangladesh A Household Labor Market Approach," LERNA Working Papers 09.25.301, LERNA, University of Toulouse.
  2. Philippe Michel & Gilles Rotillon, 1995. "Disutility of pollution and endogenous growth," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 6(3), pages 279-300, October.
  3. Rema Hanna & Paulina Oliva, 2011. "The Effect of Pollution on Labor Supply: Evidence from a Natural Experiment in Mexico City," NBER Working Papers 17302, National Bureau of Economic Research, Inc.
  4. Bovenberg, A.L. & de Mooij, R.A., 1994. "Environmental levies and distortionary taxation," Other publications TiSEM 4b32deaa-ec2f-4de7-b59b-9, Tilburg University, School of Economics and Management.
  5. Joshua Graff Zivin & Matthew Neidell, 2014. "Temperature and the Allocation of Time: Implications for Climate Change," Journal of Labor Economics, University of Chicago Press, vol. 32(1), pages 1 - 26.
  6. Joshua S. Graff Zivin & Matthew J. Neidell, 2011. "The Impact of Pollution on Worker Productivity," NBER Working Papers 17004, National Bureau of Economic Research, Inc.
  7. Frederick Ploeg & Cees Withagen, 1991. "Pollution control and the Ramsey problem," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 1(2), pages 215-236, June.
  8. Seegmuller, Thomas & Verch Re, Alban, 2007. "A Note On Indeterminacy In Overlapping Generations Economies With Environment And Endogenous Labor Supply," Macroeconomic Dynamics, Cambridge University Press, vol. 11(03), pages 423-429, June.
  9. Tahvonen Olli & Kuuluvainen Jari, 1993. "Economic Growth, Pollution, and Renewable Resources," Journal of Environmental Economics and Management, Elsevier, vol. 24(2), pages 101-118, March.
  10. Wolfram Schlenker & W. Reed Walker, 2011. "Airports, Air Pollution, and Contemporaneous Health," NBER Working Papers 17684, National Bureau of Economic Research, Inc.
  11. Junxi Zhang, 1999. "Environmental sustainability, nonlinear dynamics and chaos," Economic Theory, Springer, vol. 14(2), pages 489-500.
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