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Environmental policy and inequality: A matter of life and death

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  • Karine Constant

    () (Université Paris Est, Erudite)

Abstract

This paper analyzes the economic implications of an environmental policy when we take into account the life expectancy of heterogeneous agents. In a framework in which everyone suffers from pollution, but health status depends also on individual human capital, we find that the economy may be stuck in a trap in which inequalities persistently grow, when the initial pollution intensity of production is too high. Moreover, we emphasize that such inequalities are costly in the long run for the economy, in particular in terms of health and growth. Therefore, we study whether a tax on pollution associated with an investment in pollution abatement can be used to overcome this situation. We show that a stricter environmental policy may allow the economy to escape from the inequality trap while it enhances its long-term growth rate, when initial inequalities are not too high.

Suggested Citation

  • Karine Constant, 2017. "Environmental policy and inequality: A matter of life and death," Working Papers 2017.07, FAERE - French Association of Environmental and Resource Economists.
  • Handle: RePEc:fae:wpaper:2017.07
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    References listed on IDEAS

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    Cited by:

    1. Can Askan Mavi, 2016. "Uncertain Catastrophic Events : Another Source of Environmental Traps ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01275174, HAL.
    2. Can Askan Mavi, 2016. "Uncertain Catastrophic Events : Another Source of Environmental Traps ?," Working Papers halshs-01275174, HAL.
    3. Karine Constant & Natacha Raffin, 2016. "Environnement, croissance et inégalités : le rôle particulier du canal de la santé," Revue française d'économie, Presses de Sciences-Po, vol. 0(3), pages 9-29.

    More about this item

    Keywords

    Endogenous growth; Environmental policy; Human capital; Inequality; Longevity;

    JEL classification:

    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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