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Environmental Policy, Education and Growth: A Reappraisal when Lifetime Is Finite

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  • Xavier Pautrel

    (Nantes Atlantique Université)

Abstract

This article demonstrates that when finite lifetime is introduced in a Lucas (1988) growth model, the environmental policy may enhance growth both in the short- and the long-run, while pollution does not influence educational activities, labor supply is not elastic and human capital does not enter the utility function. This is because finite lifetime and the appearance of newborns at each date creates a turnover of generations which disconnects the aggregate consumption growth to the interest rate. We show that the shorter is the horizon, the greater the effect of the environmental policy on growth, because the higher the “generational turnover effect”. We also demonstrate that when time is not the single production factor in education, the environmental policy promotes growth only if time remains the predominant factor. Otherwise, the crowding-out effect of the tighter environmental policy dominates the “generational turnover effect” and growth diminishes. Finally, when the source of pollution is final output rather than physical capital and time is the single factor in education, the environmental does not affect growth in the steady-state, despite the “generational turnover effect”. Nevertheless, if the education good is introduced, the positive influence of the environmental policy appears again.

Suggested Citation

  • Xavier Pautrel, 2008. "Environmental Policy, Education and Growth: A Reappraisal when Lifetime Is Finite," Working Papers 2008.57, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2008.57
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Karine Constant & Marion Davin, 2014. "Environmental Policy and Growth in a Model with Endogenous Environmental Awareness," AMSE Working Papers 1405, Aix-Marseille School of Economics, France, revised Mar 2014.
    2. Carraro, Carlo & De Cian, Enrica & Tavoni, Massimo, 2012. "Human Capital, Innovation, and Climate Policy: An Integrated Assessment," Climate Change and Sustainable Development 122861, Fondazione Eni Enrico Mattei (FEEM).
    3. Carlo Carraro & Enrica De Cian & Lea Nicita, 2009. "Modeling Biased Technical Change. Implications For Climate Policy," Working Papers 2009_27, Department of Economics, University of Venice "Ca' Foscari".
    4. Ingrid Ott & Susanne Soretz, 2018. "Green Attitude and Economic Growth," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(4), pages 757-779, August.
    5. Xavier Pautrel, 2015. "Abatement Technology and the Environment–Growth Nexus with Education," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(3), pages 297-318, July.
    6. Kirschbaum, Birgit & Soretz, Susanne, 2017. "Human capital, pollution control, and endogenous growth," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168186, Verein für Socialpolitik / German Economic Association.
    7. Carlo Carraro & Enrica De Cian & Massimo Tavoni, 2009. "Human Capital Formation and Global Warming Mitigation: Evidence from an Integrated Assessment Model," CESifo Working Paper Series 2874, CESifo.
    8. Chu, Hsun & Lai, Ching-chong & Liao, Chih-hsing, 2016. "A Note On Environment-Dependent Time Preferences," Macroeconomic Dynamics, Cambridge University Press, vol. 20(6), pages 1652-1667, September.
    9. Pautrel, Xavier, 2009. "Pollution and life expectancy: How environmental policy can promote growth," Ecological Economics, Elsevier, vol. 68(4), pages 1040-1051, February.
    10. Basseti, Thomas & Benos, Nikos & Karagiannis, Stelios, 2010. "How policy can influence human capital accumulation and environment quality," MPRA Paper 21754, University Library of Munich, Germany.
    11. Yoshihiro Hamaguchi, 2021. "Environmental policy and social status preference for education in an Uzawa–Lucas model," Bulletin of Economic Research, Wiley Blackwell, vol. 73(3), pages 456-468, July.

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    Keywords

    Growth; Environment; Overlapping generations; Human capital;
    All these keywords.

    JEL classification:

    • C - Mathematical and Quantitative Methods
    • O - Economic Development, Innovation, Technological Change, and Growth

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