Open AccessSubsidizing Human Capital to Overcome the Green Paradox—A Demand-Side Approach
Author(s) -
Arne Steinkraus
Publication year - 2016
Publication title -
journal of management and sustainability
Language(s) - English
Resource type - Journals
eISSN - 1925-4733
pISSN - 1925-4725
DOI - 10.5539/jms.v6n4p1
Subject(s) - subsidy , demand side , incentive , economics , great rift , natural resource economics , human capital , perspective (graphical) , production (economics) , public economics , capital (architecture) , resource (disambiguation) , microeconomics , market economy , computer science , physics , archaeology , astronomy , artificial intelligence , history , computer network
This paper shifts the perspective of the recent green paradox literature towards the demand side. Based on a simple model, I show that a subsidy on input factors in a Cobb-Douglas production functionmay contribute substantially to postponing resource extraction into the future and, thereby, to limit the future costs of climate change. Specifically, indirect subsidies on human capital, such as investments in education, are plausible policy options to mitigate carbon dioxide emissions because it is robust to short-sighted incentives on the part of politicians and resource owners.