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Optimal Population Policy with Health Care and Lethal Pollution

Author

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  • Ulla Lehmijoki

    (University of Helsinki, IZA)

  • Tapio Palokangas

    (University of Helsinki)

Abstract

Optimal population policy is examined in the following setup. Families invest in capital, spend on health care and determine their number of children. Firms produce output from labor, capital and pollutants. Pollution increases, but private and public health care decrease mortality dynamically, with lags. Our main findings are the following. A marginal increase in public health care improves welfare as long as it diminishes the mortality rate more than that in private health care. The government can decentralize the social optimum by a parental tax on newborns and a Pigouvian tax on pollutants. Private health care should not be taxed.

Suggested Citation

  • Ulla Lehmijoki & Tapio Palokangas, 2023. "Optimal Population Policy with Health Care and Lethal Pollution," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(1), pages 31-47, January.
    • Handle: RePEc:spr:portec:v:22:y:2023:i:1:d:10.1007_s10258-021-00202-x
    DOI: 10.1007/s10258-021-00202-x
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    References listed on IDEAS

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