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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. 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.
  2. Hanna, Rema & Oliva, Paulina, 2015. "The effect of pollution on labor supply: Evidence from a natural experiment in Mexico City," Journal of Public Economics, Elsevier, vol. 122(C), pages 68-79.
  3. Carson, Richard T & Koundouri, Phoebe & Nauges, Céline, 2009. "Arsenic Mitigation in Bangladesh: A Houseold Labor Market Approach," University of California at San Diego, Economics Working Paper Series qt5112208j, Department of Economics, UC San Diego.
  4. 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.
  5. Junxi Zhang, 1999. "Environmental sustainability, nonlinear dynamics and chaos," Economic Theory, Springer, vol. 14(2), pages 489-500.
  6. 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.
  7. Joshua Graff Zivin & Matthew Neidell, 2012. "The Impact of Pollution on Worker Productivity," American Economic Review, American Economic Association, vol. 102(7), pages 3652-73, December.
  8. 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.
  9. Wolfram Schlenker & W. Reed Walker, 2011. "Airports, Air Pollution, and Contemporaneous Health," NBER Working Papers 17684, National Bureau of Economic Research, Inc.
  10. 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.
  11. 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.
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