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Relief for the Environment? The Importance of an Increasingly Unimportant Industrial Sector

  • Martin Gassebner


    (Department of Management, Technology and Economics, ETH Zurich)

  • Noel Gaston


    (School of Business, Bond University, Gold Coast, Queensland, Australia)

  • Michael Lamla


    (Department of Management, Technology and Economics, ETH Zurich)

Deindustrialisation, stagnant real incomes of production workers and increasing inequality are latter-day features of many economies. It’s common to assume that such developments pressure policy-makers to relax environmental standards. However, when heavily polluting industries become less important economically, their political importance also tends to diminish. Consequently, a regulator may increase the stringency of environmental policies. Like some other studies, we find that declining industrial employment translates into stricter environmental standards. In contrast to previous studies, but consistent with our argument, we find that greater income inequality is associated with policies that promote a cleaner environment.

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Paper provided by KOF Swiss Economic Institute, ETH Zurich in its series KOF Working papers with number 06-130.

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Length: 47 pages
Date of creation: Mar 2006
Date of revision:
Handle: RePEc:kof:wpskof:06-130
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