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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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Paper provided by European University at St. Petersburg, Department of Economics in its series CEEES Paper Series with number CE3S-05/13.

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Length: 19 pages
Date of creation: 02 Nov 2013
Date of revision:
Handle: RePEc:eus:ce3swp:0513
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  1. repec:ner:tilbur:urn:nbn:nl:ui:12-152985 is not listed on IDEAS
  2. de Bovenberg, A Lans & Mooij, Ruud A, 1994. "Environmental Levies and Distortionary Taxation," American Economic Review, American Economic Association, vol. 84(4), pages 1085-89, September.
  3. 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.
  4. Wolfram Schlenker & W. Reed Walker, 2011. "Airports, Air Pollution, and Contemporaneous Health," NBER Working Papers 17684, National Bureau of Economic Research, Inc.
  5. Joshua Graff Zivin & Matthew J. Neidell, 2010. "Temperature and the Allocation of Time: Implications for Climate Change," NBER Working Papers 15717, National Bureau of Economic Research, Inc.
  6. 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.
  7. Junxi Zhang, 1999. "Environmental sustainability, nonlinear dynamics and chaos," Economic Theory, Springer, vol. 14(2), pages 489-500.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. Thomas Seegmuller & Alban Verchère, 2007. "A Note on Indeterminacy in Overlapping Generations Economies with Environment and Endogenous Labor Supply," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00194230, HAL.
  13. repec:ner:tilbur:urn:nbn:nl:ui:12-3107039 is not listed on IDEAS
  14. 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.
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