Labor Supply and Growth Effects of Environmental Policy under Technological Risk

Authors

  • Christiane Clemens
  • Karen Pittel

DOI:

https://doi.org/10.24352/UB.OVGU-2018-350

Keywords:

stochastic growth, pollution, abatement, elastic labor supply

Abstract

This paper analyzes the effects of technological risk on long-run growth when labor supply is elastic and production gives rise to a pollution externality. For the social planner as well as for the market economy we show that the randomness of production as well as the endogeneity of labor supply matter with respect to the equilibrium solution. The direction in which changes in the model parameters as well as changes of policy instruments influence labor supply and growth depends crucially on the volatility of output.

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Published

2018-09-04

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Section

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