Environmental Protection in the Presence of Unemployment and Common Resources (original) (raw)

Pollution, Capital Mobility and Tax Policies with Unemployment

Review of Development Economics, 2008

In this paper we highlight aspects related to the links among unemployment, international capital mobility, and tax policies in a small open developing economy. Without international capital mobility, the joint optimal trade and environmental policies require a zero tariff and an emission tax lower than the Pigouvian tax. With international capital mobility and a capital tax (subsidy), the optimal emission tax rate is smaller (larger) compared to the rate when capital is untaxed.When both the emission tax and the capital tax/subsidy are jointly chosen optimally, then the optimal policy on capital is a lower subsidy, or even a tax, compared to the standard capital subsidy of the no pollution case.

Trade and Environmental Policies, Renewable Resources and Unemployment

2009

This paper examines the effects of trade and environmental polices on the stock of renewable resource and urban unemployment. We will also investigate the welfare effects of those policies. We assume that the renewable resource has positive externalities on the production of an agricultural good so that it corresponds to a natural environmental good. We will consider the short-run equilibrium

Export Bans, Environmental Protection, and Unemployment

Review of Development Economics, 1997

This study investigates the case for an export ban on intermediate goods which generate environmental damage. Since export restrictions on intermediates have long been advocated as a method of stimulating domestic industries in developing countries, we consider whether the case for an export ban is strengthened or weakened by the presence of unemployment in the industrial sector. We find that, in the short run, an export restriction worsens unemployment, thus weakening the case for a ban. In the long run, however, the results are reversed. If the environmental problem is severe, unemployment has a negligible impact on the case for an export ban.

The incidence of environmental regulation in a developing economy with sector-specific unemployment: a note

Economics and Business Letters, 2012

This note investigates the effects of environmental regulation in a general-equilibrium model incorporating capital mobility and sector-specific unemployment. The government sets a maximum allowable level of environmental use in advance. This environmental use beneficially affects the production, but causes negative externality which is restricted by a regulating function. It specifically examines the effects of environmental regulation on output levels, factor returns, urban unemployment ratio, the incidence issue and the national income. Our analysis reveals that the trade-off relationship between environment and economic development is likely to exist.

Trade Liberalization, Foreign Aid, and Welfare under Unemployment and Cross-border Pollution

We construct a two-country general equilibrium model of foreign aid, with unemployment in the recipient country and cross-border pollution from this country to the donor. Pollution is entirely abated by the recipient's private and public sectors. We examine the optimal response of the two countries in terms of the size and use of aid, and in terms of environmental policies in reaction to two exogenous shocks. First, an improvement in the terms of trade as a proxy of freer trade and globalization. Second, a decrease in the recipient's minimum wage as a reform proxy of its labor market. We examine cases where such changes may lead to welfare improvement in both countries, accounting for the optimal adjustments of their policy instruments.

The environment and welfare implications of trade and tax policy

Journal of Development Economics, 1997

Developing countries with comparative advantage in dirty industries face the risk of environmental degradation unless appropriate policies are implemented. Using applied general equilibrium analysis, we examine how trade influences the environment and assess the welfare and environmental implications of alternative pollution abatement policies for Indonesia. Our results indicate that unilateral trade liberalization by Indonesia would increase the ratio of emission levels to real output for almost all major pollution categories. More importantly, when tariff removal is combined with a cost-effective tax policy, the twin objectives of welfare enhancement and environmental quality improvement appear to be feasible. This sheds new and positive light on the role of trade in sustainable development.

Unemployment and the optimal export-processing zone

Journal of Development Economics, 1991

In a country with Harris-T4aro ~~~rn~~o~rne~t. the formation of an urban e%~~~-~~~ss~n~ zone reduces X&OizZd income unless it raises rural wages. In that case. increases in zone wa increase nationa! ixome by kss than de ntk. If fm-eien capital is taxed opti Iy. teen intermediate imports into the zone shoutd subsidrti. <hiie the wage should at the minimum feasible level. For a given tax policy, either the wage should be at the minimum or the ad valorem tariff on the intermediate should exceed the inverse of the elasticity of supply of labor from the countryside. Existing zone policies depart from these presctiptlons. L. Young, Unemployment and the oprimJ export-processing zone

Open access renewable resources, urban unemployment, and the resolution of dual institutional failures

Environment and Development Economics

This paper investigates how poverty reduction and natural resource preservation can be simultaneously achieved in a small open dual economy with urban wage rigidity, open access rural resources, and rural-urban migration. An increase in the export tax rate on the rural resource good increases urban unemployment in both the short run and the long run with resource dynamics. Given the institutional failures, the first-best policy is an urban wage subsidy combined with either a rural wage subsidy at a lower rate or, if the urban output price is sufficiently high, a rural tax. When the institutional failures can be resolved endogenously, an increase in the export tax on the resource good can induce rural institutional change away from open access. However, tariff protection of urban manufacturing hinders such a rural institutional change.

Export Bans, Environment, and Developing Country Welfare

Review of International Economics, 1995

Deforestation is a serious problem in several developing countries which are timber exporters. Export bans on logs, therefore. have been hailed by some as a welfare-improving policy relative :o free trade. This paper explores the case for an export ban on an intermediate good whose production generates environmental damage. In this two-good model, a trade-off emerges between achieving the environmental target and raising national welfare. When environmental damage grows rapidly with output. an export ban is likely to raise welfare. However. it i3 also likely to lead to higher rates of harvesting than are sustainable.

Environmental Protection and Optimal Taxation

Policy Research Working Papers, 1999

The Policy Researcb Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be used and cited accordingly. The findings, interpretations, and conclusions are the authors' own and should not be attributed to the World Bank, its Executive Board of Directors, or any of its member countries.