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Are pollution permit markets harmful for employment?

Author

Listed:
  • Nicolas Sanz

    (CEREGMIA - Centre de Recherche en Economie, Gestion, Modélisation et Informatique Appliquée - UAG - Université des Antilles et de la Guyane)

  • Sonia Schwartz

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper analyzes the effects of pollution permit markets on equilibrium employment in a wage-setting/ price-setting (WS-PS) model. The employment level is determined according to different methods of financing unemployment benefits: a wage tax or the revenue from a pollution permit auction. We show that a permit market weakens the trade unions' market power. Furthermore, whatever the method of financing unemployment benefits, the choice of the pollution cap is always neutral for employment, and the level of employment always increases as the pollution abatement technology becomes more efficient. Depending on the value of the wage tax, the employment level can be higher or lower when unemployment benefits are financed by pollution permits rather than wage tax.

Suggested Citation

  • Nicolas Sanz & Sonia Schwartz, 2013. "Are pollution permit markets harmful for employment?," Post-Print halshs-00866721, HAL.
    • Handle: RePEc:hal:journl:halshs-00866721
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    Cited by:

    1. Xavier Pautrel, 2018. "Environmental Policy and Health in the Presence of Labor Market Imperfections," TEPP Working Paper 2018-09, TEPP.
    2. Shi, Beibei & Jiang, Lisha & Bao, Rui & Zhang, Ziqing & Kang, YuanQi, 2023. "The impact of insurance on pollution emissions: Evidence from China's environmental pollution liability insurance," Economic Modelling, Elsevier, vol. 121(C).
    3. Yusen Gao & Changsheng Hu & Yue Yang, 2022. "Will tougher environmental policy reduce the employment of industrial enterprises? The heterogeneity analysis based on enterprise level and city level," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1810-1834, September.

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    More about this item

    Keywords

    Monopolistic competition; Equilibrium employment; Pollution permit market; Unemployment benefits;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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