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Eco-Labelling and the Labour Market

  • Sen, Anindita

In this paper I try to analyse the impact of environmental policies in the presence of eco-labelling on the wage level and production levels. For this I start with a general equilibrium framework where a country produces two traded goods using labour and capital, one of which pollutes when consumed. The pollution generated depends on the abatement technology used by the firms and also the scale of production and affects the health of workers and labour productivity. Since the consumers are adversely affected by the pollution generation, they are willing to pay a higher price for a cleaner variety of the dirty good. However, since the pollution is generated during production, they cannot judge the cleanliness of a good. Here the government steps in, monitors the pollution generation and issues an eco-labelling certificate regarding the quality. In this framework, analyse the impact of environmental standards on the wage levels and production. I find that a minimum standard adversely affects the wage rate, unless the productivity effect is very small. However, the eco-labelling process aides the labour market as it tempers the impact of the standard on wages.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 49169.

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Date of creation: 18 Dec 2012
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Handle: RePEc:pra:mprapa:49169
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  1. Copeland, Brian R. & Taylor, M. Scott, 1999. "Trade, spatial separation, and the environment," Journal of International Economics, Elsevier, vol. 47(1), pages 137-168, February.
  2. Morgenstern, Richard D. & Pizer, William A. & Shih, Jhih-Shyang, 2002. "Jobs Versus the Environment: An Industry-Level Perspective," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 412-436, May.
  3. Williams, Roberton III, 2002. "Environmental Tax Interactions when Pollution Affects Health or Productivity," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 261-270, September.
  4. Mattoo, Aaditya & Singh, Harsha V, 1994. "Eco-labelling: Policy Considerations," Kyklos, Wiley Blackwell, vol. 47(1), pages 53-65.
  5. Wesley Nimon & John Beghin, 1999. "Ecolabels and International Trade in the Textile and Apparel Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1078-1083.
  6. Bansal, Sangeeta & Gangopadhyay, Shubhashis, 2003. "Tax/subsidy policies in the presence of environmentally aware consumers," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 333-355, March.
  7. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June.
  8. Roger A. Sedjo & Stephen K. Swallow, 2002. "Voluntary Eco-Labeling and the Price Premium," Land Economics, University of Wisconsin Press, vol. 78(2), pages 272-284.
  9. Ichiroh Daitoh, 2003. "Environmental Protection and Urban Unemployment: Environmental Policy Reform in a Polluted Dualistic Economy," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 496-509, 08.
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