Environmental Tax Reform, Economic Growth, and Unemployment in an OLG Economy
Author: Ono, Tetsuo
Source: FinanzArchiv: Public Finance Analysis, Volume 63, Number 1, March 2007 , pp. 133-161(29)
Publisher: Mohr Siebeck
Abstract:
This paper develops an overlapping-generations model characterized by endogenous growth, unemployment, and pollution. The paper focuses on the replacement ratio, which measures the proportion of after-tax work earnings replaced by unemployment benefits, and considers a replacement-ratio-neutral reform in which the environmental tax is devoted to cutting the employees' rate of contribution to unemployment insurance. Under this reform, (i) the growth rate is increased, the unemployment rate is unchanged, and pollution is decreased; (ii) there is a trade-off of nonenvironmental utility between current and future generations; and (iii) when the reform is associated with an intergenerational transfer from the young to the old, the nonenvironmental utility of every generation can be improved.Keywords: ECONOMIC GROWTH; ENVIRONMENTAL TAX REFORM; OVERLAPPING GENERATIONS; REPLACEMENT RATIO; UNEMPLOYMENT
Document Type: Research article
DOI: http://dx.doi.org/10.1628/001522107X186755
Publication date: 2007-03-01
- FinanzArchiv founded in 1884 is one of the world's oldest professional journals in public finance.
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