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Growth and Demographic Change: Do Environmental Factors Matter?

  • Dimitrios Varvarigos

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  • Intan Zanariah Zakaria
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    We incorporate health-damaging pollution into a three period overlapping generations model in which life expectancy, fertility and economic growth are all endogenous. We show that environmental factors can cause significant changes to the economy’s demographics. In particular, the entrepreneurial choice of less polluting production processes, induced by environmental policy, can account for such demographic changes as higher longevity and lower fertility rates.

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    File URL: http://www.le.ac.uk/economics/research/repec/lec/leecon/dp11-46.pdf
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    Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 11/46.

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    Date of creation: Sep 2011
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    Handle: RePEc:lec:leecon:11/46
    Contact details of provider: Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
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    Web page: http://www2.le.ac.uk/departments/economics
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    1. Mariani, Fabio & Pérez-Barahona, Agustín & Raffin, Natacha, 2010. "Life expectancy and the environment," Journal of Economic Dynamics and Control, Elsevier, vol. 34(4), pages 798-815, April.
    2. Azarnert, L.V.Leonid V., 2004. "Redistribution, fertility, and growth: The effect of the opportunities abroad," European Economic Review, Elsevier, vol. 48(4), pages 785-795, August.
    3. Larry E. Jones & Rodolfo E. Manuelli, 2001. "Endogenous Policy Choice: The Case of Pollution and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 369-405, July.
    4. Poul Schou, 2002. "Pollution Externalities in a Model of Endogenous Fertility and Growth," International Tax and Public Finance, Springer, vol. 9(6), pages 709-725, November.
    5. Requate, Till, 2005. "Dynamic incentives by environmental policy instruments--a survey," Ecological Economics, Elsevier, vol. 54(2-3), pages 175-195, August.
    6. Bhattacharya, Joydeep & Qiao, Xue, 2005. "Public and Private Expenditures on Health in a Growth Model," Staff General Research Papers 12378, Iowa State University, Department of Economics.
    7. Pautrel, Xavier, 2009. "Pollution and life expectancy: How environmental policy can promote growth," Ecological Economics, Elsevier, vol. 68(4), pages 1040-1051, February.
    8. Pierre-André Jouvet & Pierre Pestieau & Grégory Ponthière, 2007. "Longevity and environmental quality in an OLG model," EconomiX Working Papers 2007-19, University of Paris West - Nanterre la Défense, EconomiX.
    9. Dimitrios Varvarigos, 2010. "Environmental Degradation, Longevity, and the Dynamics of Economic Development," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 46(1), pages 59-73, May.
    10. Cervellati, Matteo & Sunde, Uwe, 2007. "Human Capital, Mortality and Fertility: A Unified Theory of the Economic and Demographic Transition," CEPR Discussion Papers 6384, C.E.P.R. Discussion Papers.
    11. Frank Joest & Martin Quaas & Johannes Schiller, 2006. "Environmental problems and economic development in an endogenous fertility model," Working Papers 0428, University of Heidelberg, Department of Economics, revised Aug 2006.
    12. Komen, Marinus H.C. & Gerking, Shelby & Folmer, Henk, 1997. "Income and environmental R D: empirical evidence from OECD countries," Environment and Development Economics, Cambridge University Press, vol. 2(04), pages 505-515, November.
    13. Shankha Chakraborty, 2002. "Endogenous Lifetime and Economic Growth," University of Oregon Economics Department Working Papers 2002-03, University of Oregon Economics Department, revised 26 Jan 2002.
    14. Galor, Oded & Weil, David N, 1996. "The Gender Gap, Fertility, and Growth," American Economic Review, American Economic Association, vol. 86(3), pages 374-87, June.
    15. Liao, Pei-Ju, 2011. "Does demographic change matter for growth?," European Economic Review, Elsevier, vol. 55(5), pages 659-677, June.
    16. Jie Zhang & Junsen Zhang, 2005. "The Effect of Life Expectancy on Fertility, Saving, Schooling and Economic Growth: Theory and Evidence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 45-66, 03.
    17. Ulla Lehmijoki & Tapio Palokangas, 2010. "Trade, population growth, and the environment in developing countries," Journal of Population Economics, Springer, vol. 23(4), pages 1351-1370, September.
    18. Blackburn, Keith & Cipriani, Giam Pietro, 2002. "A model of longevity, fertility and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(2), pages 187-204, February.
    19. Palivos, Theodore, 2001. "Social norms, fertility and economic development," Journal of Economic Dynamics and Control, Elsevier, vol. 25(12), pages 1919-1934, December.
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