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Inequality, growth, and environmental quality trade‐offs in a model with human capital accumulation

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  • Marta Aloi
  • Frederic Tournemaine

Abstract

This paper develops a simple endogenous growth model where pollution exposure and vulnerability are unequally spread across the population, and growth and distribution are endogenous. In this set‐up, we investigate whether trade‐offs between growth, distributional, and environmental concerns may emerge. We show that a tighter environmental policy reduces income inequality and can improve both growth and total welfare. Immediate welfare losses, though, do occur, and are larger for countries that start at low levels of environmental quality (e.g. developing countries). Inégalité, croissance et qualité de l'environnement : arbitrages dans un modèle d'accumulation de capital humain. Nous développons un modèle de croissance endogène où l'exposition et la vulnérabilité à la pollution sont inégalement réparties dans la population, et où la croissance et la distribution des revenus sont déterminées de façon endogène. Dans ce cadre d'analyse, nous cherchons s'il existe des arbitrages entre la croissance, les inégalités et l'environnement, notamment dans les pays en développement. Nous montrons qu'une politique environnementale plus stricte conduit à la fois à une réduction des inégalit és et, à une augmentation de la croissance et du bien‐être. Dans un premier temps, cependant, ce changement de politique conduit à une réduction du bien‐être qui est relativement plus importante pour les pays dont la qualité environmentale est initiallement faible (e.g., les pays en développement).

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  • Marta Aloi & Frederic Tournemaine, 2013. "Inequality, growth, and environmental quality trade‐offs in a model with human capital accumulation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(3), pages 1123-1155, August.
  • Handle: RePEc:wly:canjec:v:46:y:2013:i:3:p:1123-1155
    DOI: 10.1111/caje.12046
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    Cited by:

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    2. Chang, Juin-Jen & Huang, Chien-Yu & Wong, Chun Yee & Yang, Yibai, 2023. "Environmental regulation stringency and allocation between R&D and physical capital: A two-engine growth model," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 733-753.
    3. Karine Constant & Natacha Raffin, 2016. "Environnement, croissance et inégalités : le rôle particulier du canal de la santé," Revue française d'économie, Presses de Sciences-Po, vol. 0(3), pages 9-29.
    4. Dimitrios Varvarigos, 2013. "Economic Growth, Health, and the Choice of Polluting Technologies: The Role of Bureaucratic Corruption," Discussion Papers in Economics 13/22, Division of Economics, School of Business, University of Leicester.
    5. Constant, Karine, 2019. "Environmental policy and human capital inequality: A matter of life and death," Journal of Environmental Economics and Management, Elsevier, vol. 97(C), pages 134-157.
    6. Frederic Tournemaine & Christopher Tsoukis, 2018. "The Great Transition: Implications From Environmental Policy For The Quality–Quantity Trade-Off In Children-Rearing," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(05), pages 1155-1174, December.
    7. Karine Constant & Natacha Raffin, 2016. "Environnement, croissance et inégalités : le rôle particulier du canal de la santé," Revue française d'économie, Presses de Sciences-Po, vol. 0(3), pages 9-29.
    8. Karine Constant, 2015. "Environmental Policy and Inequality: A Matter of Life and Death," Working Papers halshs-01174052, HAL.
    9. Abbas Valadkhani & Israfil Roshdi & Russell Smyth, 2015. "A multicomponent DEA approach to measure the economic and energy efficiencies of OECD countries," Monash Economics Working Papers 09-15, Monash University, Department of Economics.

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    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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