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| Author: | Wagner, T. |
| Title: | Environmental policy and the equilibrium rate of unemployment |
| Journal: | Journal of Environmental Economics and Management
2005 : JAN, VOL. 49:1, p. 132-156 |
| Index terms: | efficiency environmental policy unemployment |
| Language: | eng |
| Abstract: | This article explores the question whether a low equilibrium rate of unemployment and a high quality of the environment are complementary policy goals or must be traded off. It is shown that an interval exists for a tax on emissions where the two goals are indeed complementary. The tax stimulates the emergence of an abatement sector which provides pollution control and vacancies for the job seekers. The optimal emission tax is an increasing function of the worker's bargaining strength. For labour markets where workers have a strong bargaining position, the optimal pollution tax may easily exceed Pigouvian tax. |
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