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How do improvements in labour productivity in the Scottish economy affect the UK position on the Environmental Kuznets Curve?

Author

Listed:
  • Nick Hanley

    () (Department of Economics, University of Stirling)

  • Karen Turner

    () (Department of Economics, University of Strathclyde)

Abstract

The Environmental Kuznets Curve (EKC) hypothesis focuses on the argument that rising prosperity will eventually be accompanied by falling pollution levels as a result of one or more of three factors: (1) structural change in the economy; (2) demand for environmental quality increasing at a more-than-proportional rate; (3) technological progress. Here, we focus on the third of these. In previous work we have used single region/nation models of the Scottish and UK economies to simulate the impacts of increased labour and energy efficiency on the domestic economy’s position on the EKC, with a specific focus on CO2 emissions. There we find that, while the impacts of an increase in energy efficiency are difficult to predict, mainly due to the potential for ‘rebound’ effects, while increasing CO2 emissions, improved labour productivity is likely to move an economy along its EKC through more rapid GDP growth. However, recent developments in the EKC literature have raised the issue of whether this will still be the case if emissions are accounted for from a consumption rather than a production perspective (the ‘pollution leakage’ hypothesis) – i.e. taking account of indirect pollution generation embodied in trade flows rather than just domestic emissions generation. Here we extend our earlier single region analysis for Scotland by using an interregional CGE model of the UK economy to examine the likely impacts of an increase in Scottish labour productivity on the rest of the UK and on a national EKC through interregional labour migration and trade flows.

Suggested Citation

  • Nick Hanley & Karen Turner, 2009. "How do improvements in labour productivity in the Scottish economy affect the UK position on the Environmental Kuznets Curve?," Working Papers 0915, University of Strathclyde Business School, Department of Economics.
  • Handle: RePEc:str:wpaper:0915
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    References listed on IDEAS

    as
    1. Janine De Fence & Nick Hanley & Karen Turner, 2009. "Do Productivity Improvements Move Us Along the Environmental Kuznets Curve?," Working Papers 0908, University of Strathclyde Business School, Department of Economics.
    2. Mark Partridge & Dan Rickman, 2010. "Computable General Equilibrium (CGE) Modelling for Regional Economic Development Analysis," Regional Studies, Taylor & Francis Journals, vol. 44(10), pages 1311-1328.
    3. Harrigan, Frank & McGregor, Peter G. & Dourmashkin, Neil & Perman, Roger & Swales, Kim & Yin, Ya Ping, 1991. "AMOS : A macro-micro model of Scotland," Economic Modelling, Elsevier, vol. 8(4), pages 424-479, October.
    4. Arrow, Kenneth & Bolin, Bert & Costanza, Robert & Dasgupta, Partha & Folke, Carl & Holling, C.S. & Jansson, Bengt-Owe & Levin, Simon & Mäler, Karl-Göran & Perrings, Charles & Pimentel, David, 1996. "Economic growth, carrying capacity, and the environment," Environment and Development Economics, Cambridge University Press, vol. 1(01), pages 104-110, February.
    5. Costanza, Robert, 1995. "Economic growth, carrying capacity, and the environment," Ecological Economics, Elsevier, vol. 15(2), pages 89-90, November.
    6. Turner, Karen & Gilmartin, Michelle & McGregor, Peter G. & Swales, J. Kim, 2009. "The added value from adopting a CGE approach to analyse changes in environmental trade balances," SIRE Discussion Papers 2009-13, Scottish Institute for Research in Economics (SIRE).
    7. Mark D. Partridge & Dan S. Rickman, 1998. "Regional Computable General Equilibrium Modeling: A Survey and Critical Appraisal," International Regional Science Review, , vol. 21(3), pages 205-248, December.
    8. Bretschger, Lucas, 2005. "Economics of technological change and the natural environment: How effective are innovations as a remedy for resource scarcity?," Ecological Economics, Elsevier, vol. 54(2-3), pages 148-163, August.
    9. Stern , David I., 1998. "Progress on the environmental Kuznets curve?," Environment and Development Economics, Cambridge University Press, vol. 3(02), pages 173-196, May.
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    Cited by:

    1. Michelle Gilmartin & David Learmouth & J Kim Swales & Peter McGregor & Karen Turner, 2013. "Regional Policy Spillovers: The National Impact of Demand-Side Policy in an Interregional Model of the UK Economy," Environment and Planning A, , vol. 45(4), pages 814-834, April.

    More about this item

    Keywords

    computable general equilibrium; technological progress; environmental kuznets curve; pollution leakage;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F18 - International Economics - - Trade - - - Trade and Environment
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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