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Unemployment, rural-urban migration and environmental regulation

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  • Kuralbayeva, Karlygash

Abstract

This paper develops a general equilibrium model that incorporates specific features pertaining to developing countries: a large informal sector and rural-urban migration. A calibrated version of the model is used to study the effects of energy tax changes and a reduction in agricultural-sector energy subsidies on labor market outcomes. The results indicate that the incidence of energy taxes is partly shifted on to the rural sector through rural-urban migration. The results thus highlight the importance of modeling the features particular to developing countries and the economic general equilibrium effects when assessing the impact of environmental taxation in those countries.

Suggested Citation

  • Kuralbayeva, Karlygash, 2018. "Unemployment, rural-urban migration and environmental regulation," LSE Research Online Documents on Economics 76561, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:76561
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    File URL: http://eprints.lse.ac.uk/76561/
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    References listed on IDEAS

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    1. Bosch, Mariano & Esteban-Pretel, Julen, 2012. "Job creation and job destruction in the presence of informal markets," Journal of Development Economics, Elsevier, vol. 98(2), pages 270-286.
    2. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
    3. Gong, Xiaodong & van Soest, Arthur, 2002. "Wage differentials and mobility in the urban labour market: a panel data analysis for Mexico," Labour Economics, Elsevier, vol. 9(4), pages 513-529, September.
    4. Jean-Marc Burniaux & Joaquim Oliveira Martins, 2012. "Carbon leakages: a general equilibrium view," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 49(2), pages 473-495, February.
    5. Pissarides, Christopher A., 1998. "The impact of employment tax cuts on unemployment and wages; The role of unemployment benefits and tax structure," European Economic Review, Elsevier, vol. 42(1), pages 155-183, January.
    6. James Albrecht & Lucas Navarro & Susan Vroman, 2009. "The Effects of Labour Market Policies in an Economy with an Informal Sector," Economic Journal, Royal Economic Society, vol. 119(539), pages 1105-1129, July.
    7. Koskela, Erkki & Schob, Ronnie, 1999. "Alleviating unemployment:: The case for green tax reforms," European Economic Review, Elsevier, vol. 43(9), pages 1723-1746, October.
    8. Olivier Charlot & Franck Malherbet & Mustafa Ulus, 2016. "Unemployment Compensation and the Allocation of Labor in Developing Countries," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(3), pages 385-416, June.
    9. Yazid Dissou & Lilia Karnizova & Qian Sun, 2015. "Industry-level Econometric Estimates of Energy-Capital-Labor Substitution with a Nested CES Production Function," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(1), pages 107-121, March.
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    11. Milan Vodopivec, 2013. "Introducing unemployment insurance to developing countries," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
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    13. Carlos Lamarche, 2015. "Collective bargaining in developing countries," IZA World of Labor, Institute of Labor Economics (IZA), pages 183-183, September.
    14. Beckman, Jayson F. & Borchers, Allison & Jones, Carol, 2013. "Agriculture's Supply and Demand for Energy and Energy Products," Economic Information Bulletin 149033, United States Department of Agriculture, Economic Research Service.
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    16. Hassler, John & Krusell, Per & Olovsson, Conny, 2012. "Energy-Saving Technical Change," CEPR Discussion Papers 9177, C.E.P.R. Discussion Papers.
    17. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
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    19. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
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    22. Mathan Satchi & Jonathan Temple, 2009. "Labor Markets and Productivity in Developing Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 183-204, January.
    23. Goulder, Lawrence H., 2013. "Climate change policy's interactions with the tax system," Energy Economics, Elsevier, vol. 40(S1), pages 3-11.
    24. Mikhail Golosov & John Hassler & Per Krusell & Aleh Tsyvinski, 2014. "Optimal Taxes on Fossil Fuel in General Equilibrium," Econometrica, Econometric Society, vol. 82(1), pages 41-88, January.
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    27. repec:iza:izawol:journl:y:2015:p:183 is not listed on IDEAS
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    Cited by:

    1. Karlygash Kuralbayeva, 2019. "Environmental Taxation, Employment and Public Spending in Developing Countries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(4), pages 877-912, April.

    More about this item

    Keywords

    informal sector; matching frictions; energy taxes; subsidies; rural-urban migration;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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