Environmental sustainability of poverty reduction in a small Open dualistic economy: The case of wage subsidy policies and industrial pollution under sector-specific capital

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This chapter is the first attempt to examine the circumstances under which rural and urban wage subsidies as policies for reducing urban unemployment decrease pollution and improve welfare in a dual developing economy. In a specific-factor model of a small open Harris-Todaro economy with polluting urban manufacturing, an urban wage subsidy may decrease pollution in a realistically relevant situation where a dirty input is complementary to capital. GDP is likely to increase if rural technology exhibits strong diminishing returns to labor and if the urban population ratio is high. Welfare improves if, in addition, consumers' preferences shift toward a clean (rural) good as pollution increases. An urban wage subsidy could be consistent with environmental protection in increasing manufacturing employment and reducing urban unemployment while they work in opposite directions in improving welfare. The optimal labor market policy under a given pollution tax is characterized by the uniform urban and rural wage subsidies.

元の言語English
ホスト出版物のタイトルDeveloping Economies
ホスト出版物のサブタイトルInnovation, Investment and Sustainability
出版者Nova Science Publishers, Inc.
ページ157-175
ページ数19
ISBN(印刷物)9781611225419
出版物ステータスPublished - 2011 12 1
外部発表Yes

ASJC Scopus subject areas

  • Social Sciences(all)

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    Daitoh, I. (2011). Environmental sustainability of poverty reduction in a small Open dualistic economy: The case of wage subsidy policies and industrial pollution under sector-specific capital. : Developing Economies: Innovation, Investment and Sustainability (pp. 157-175). Nova Science Publishers, Inc..