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Employment double dividend hypothesis with the presence of a trade union

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  • Wang, Yongying
  • Ouattara, Kadohognon Sylvain

Abstract

Trade unions have a long history in countries all over the world and play a crucial role in the wages of employees through the mechanism of wage bargaining. However, this is often ignored in studies on environmental taxation. We consider a differentiated duopoly competing in a Cournot space after the wages of employees are negotiated with a trade union. We show that a positive emissions tax (resp. an emissions subsidy) is always optimal when emissions per unit of production are too high (resp. less than a certain threshold). When the emissions level is within a certain range, the union’s bargaining power impacts the government’s environmental policy choice between a positive emissions tax and an emissions subsidy.

Suggested Citation

  • Wang, Yongying & Ouattara, Kadohognon Sylvain, 2020. "Employment double dividend hypothesis with the presence of a trade union," Economics Letters, Elsevier, vol. 193(C).
    • Handle: RePEc:eee:ecolet:v:193:y:2020:i:c:s0165176520301841
    DOI: 10.1016/j.econlet.2020.109273
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    References listed on IDEAS

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    1. Fujiwara, Kenji, 2009. "Environmental policies in a differentiated oligopoly revisited," Resource and Energy Economics, Elsevier, vol. 31(3), pages 239-247, August.
    2. Luis Gautier, 2015. "Horizontal product differentiation and policy adjustment in the presence of abatement subsidies and emission taxes," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 4(1), pages 64-81, March.
    3. Kadohognon Sylvain Ouattara, 2019. "Pollution abatement and partial privatization," Economics Bulletin, AccessEcon, vol. 39(3), pages 1887-1897.
    4. Shoji Haruna & Rajeev K. Goel, 2019. "Optimal pollution control in a mixed oligopoly with research spillovers," Australian Economic Papers, Wiley Blackwell, vol. 58(1), pages 21-40, March.
    5. Carraro, Carlo & Galeotti, Marzio & Gallo, Massimo, 1996. "Environmental taxation and unemployment: Some evidence on the 'double dividend hypothesis' in Europe," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 141-181, October.
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    Cited by:

    1. Hiroyuki Nishiyama & Mizuki Tsuboi, 2024. "An employment double dividend and welfare in a North–South model of trade with or without international policy coordination," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 26(3), pages 591-612, July.
    2. Saeed, Abubakr, 2021. "The impact of employee friendly practices on dividend payments: Evidence from emerging economies," Journal of Business Research, Elsevier, vol. 135(C), pages 592-605.

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    More about this item

    Keywords

    Environmental taxes; Product differentiation; Wage bargaining; Cournot;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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