The Optimal Environmental Tax and Urban Unemployment in an Open Economy

Ichiroh Daitoh, Masaya Omote

研究成果: Article

8 引用 (Scopus)

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This paper investigates how a rise in the urban pollution tax rate may affect urban unemployment and welfare in a small open Harris-Todaro (HT) model with intersectoral capital mobility. First, by formulating urban pollution as a dirty input in manufacturing, we find that an increase in the urban pollution tax rate can increase the level of urban unemployment even with intersectoral capital mobility. That is, the optimistic finding by Rapanos (2007) that environmental protection policy reduces urban unemployment in the long run does not always hold. Second, the (sub)optimal pollution tax rate under urban unemployment is higher than the Pigouvian tax rate (the marginal damage of pollution). This result opposes those of Beladi and Chao (2006) for a closed HT economy and that of Tsakiris (2008) for an open HT economy with sector-specific capital.

元の言語English
ページ(範囲)168-179
ページ数12
ジャーナルReview of Development Economics
15
発行部数1
DOI
出版物ステータスPublished - 2011 2 1
外部発表Yes

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

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