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Labor Supply and Growth Effects of Environmental Policy under Technological Risk


  • Christiane Clemens

    () (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

  • Karen Pittel

    () (ETH Zürich)


This paper analyzes the effects of technological risk on long–run growth when labor supply is elastic and production gives rise to a pollution externality. For the social planner as well as for the market economy we show that the randomness of production as well as the endogeneity of labor supply matter with respect to the equilibrium solution. The direction in which changes in the model parameters as well as changes of policy instruments influence labor supply and growth depends crucially on the volatility of output.

Suggested Citation

  • Christiane Clemens & Karen Pittel, 2008. "Labor Supply and Growth Effects of Environmental Policy under Technological Risk," FEMM Working Papers 08009, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  • Handle: RePEc:mag:wpaper:08009

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    References listed on IDEAS

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    Cited by:

    1. Dimitrios Varvarigos, 2013. "Economic Growth, Health, and the Choice of Polluting Technologies: The Role of Bureaucratic Corruption," Discussion Papers in Economics 13/22, Department of Economics, University of Leicester.

    More about this item


    stochastic growth; pollution; abatement; elastic labor supply;

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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