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Inequality, growth, and environmental quality trade‐offs in a model with human capital accumulation
Author(s) -
Aloi Marta,
Tournemaine Frederic
Publication year - 2013
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/caje.12046
Subject(s) - economics , endogenous growth theory , inequality , environmental quality , human capital , welfare , vulnerability (computing) , population growth , growth model , capital accumulation , developing country , income distribution , economic inequality , distribution (mathematics) , population , natural resource economics , development economics , macroeconomics , economic growth , biology , ecology , market economy , environmental health , mathematical analysis , mathematics , computer security , computer science , medicine
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).