Manufacturing and agricultural pollution, private mitigation and wage inequality in the presence of pollution externalities

https://doi.org/10.17221/79/2018-AGRICECONCitation:Wang D. (2019): Manufacturing and agricultural pollution, private mitigation and wage inequality in the presence of pollution externalities. Agric. Econ. – Czech, 65: 51-58.
download PDF

The paper incorporates manufacturing and agricultural pollution into a three-sector general equilibrium model with pollution externalities both on agricultural production and labour health. Manufacturing generates pollution that affects agricultural production and health, while agriculture employs the pollutant as a factor for production that only affects health. Under the framework, this paper investigates the impacts of environmental protection policies and a rise in the self-mitigation cost of skilled and unskilled labour on wage inequality. A larger environmental tax expands wage gap if partial elasticity of substitution between labour and dirty input in the urban unskilled sector is small enough. More restrictive agricultural pollutants control narrows down the wage gap. The impact of an increase in the self-mitigation cost of skilled labour on wage inequality is ambiguous, depending on the factors substitution in agriculture and the elasticity of manufacturing pollution on agricultural production, while a larger self-mitigation cost of unskilled labour brings down the wage gap.

References:
Ahodo K., Svatonova T. (2014): The use of economic instruments in environmental policies to mitigate diffuse pollution from agriculture        . Agricultural Economics (Zemědělská ekonomika), 60, 74-81 https://doi.org/10.17221/43/2013-AGRICECON
 
Anwar Sajid, Sun Sizhong (2015): Taxation of labour income and the skilled–unskilled wage inequality. Economic Modelling, 47, 18-22 https://doi.org/10.1016/j.econmod.2014.12.037
 
Behar A. (2016): The endogenous skill bias of technical change and wage inequality in developing countries. Journal of International Trade & Economic Development, 25: 1101–1121.
 
BELADI HAMID, CHAO CHI-CHUR (2006): Environmental policy, comparative advantage, and welfare for a developing economy. Environment and Development Economics, 11, 559- https://doi.org/10.1017/S1355770X06003123
 
Beladi H., Chaudhuri S., Yabuuchi S. (2008): Can international factor mobility reduce wage inequality in a dual economy? Review of International Economics, 16: 893–903.
 
Chao C., Nabin M., Nguyen X., Sgro P. (2016): Wage inequality and welfare in developing countries: Privatization and reforms in the short and long run. International Review of Economics & Finance, 42: 474–483.
 
Chaudhuri S. (2008): Wage inequality in a dual economy and international mobility of factors: do factor intensities always matter? Economic Modelling, 25: 1155–1164.
 
Copeland Brian R., Taylor M.Scott (1999): Trade, spatial separation, and the environment. Journal of International Economics, 47, 137-168 https://doi.org/10.1016/S0022-1996(98)00020-8
 
Daitoh Ichiroh (2008): Environmental Protection and Trade Liberalization in a Small Open Dual Economy. Review of Development Economics, 0, 080310185157089-??? https://doi.org/10.1111/j.1467-9361.2008.00455.x
 
Das Pamela, Horton Richard (2018): Pollution, health, and the planet: time for decisive action. The Lancet, 391, 407-408 https://doi.org/10.1016/S0140-6736(17)32588-6
 
Harris J.R., Todaro M.P. (1970): Migration, unemployment and development: a two sector analysis. American Economic Review, 60: 126–142.
 
Kondoh K., Yabuuchi S. (2012): Unemployment, environmental policy, and international migration. Journal of International Trade & Economic Development, 21: 677–690.
 
Kuo Kuo-Hsing, Lee Cheng-Te, Wu Shang-Fen (2018): ENVIRONMENTAL POLICY AND LABOUR MARKET IMPERFECTION. Bulletin of Economic Research, 70, 175-184 https://doi.org/10.1111/boer.12122
 
Li X., Wu Y. (2018): Environment and economic in the modern agricultural development. Asia-Pacific Journal of Accounting & Economics, 25: 163–176.
 
Li Xiaochun, Xu Yuanting (2016): Unemployment, Wage Inequality and International Factor Movement in the Presence of Agricultural Dualism. Review of Development Economics, 20, 415-425 https://doi.org/10.1111/rode.12235
 
Li Xiaochun, Zhou Jing (2015): Environmental effects of remittance of rural–urban migrant. Economic Modelling, 47, 174-179 https://doi.org/10.1016/j.econmod.2015.02.023
 
Marjit Sugata, Kar Saibal (2005): Emigration and wage inequality. Economics Letters, 88, 141-145 https://doi.org/10.1016/j.econlet.2005.02.003
 
MOA (2015a): Plan for Zero Growth in Chemical Fertilizer Use in 2020. Ministry of Agriculture, Beijing. Available at www.moa.gov.cn/zwllm/tzgg/tz/201503/t20150318_4444765.htm (accessed Jan 31, 2019). (in Chinese)
 
MOA (2015b): Plan for Zero Growth in Pesticide Use in 2020. Ministry of Agriculture, Beijing. Available at www.moa.gov.cn/zwllm/tzgg/tz/201503/t20150318_4444765.htm (accessed Jan 31, 2019). (in Chinese)
 
Nakamura Azusa (2013): Environment, Urban Unemployment, and Tariffs in the Harris-Todaro Model. Review of Development Economics, 17, 585-593 https://doi.org/10.1111/rode.12052
 
Pi J., Chen X. (2016): The impacts of capital market distortion on wage inequality, urban unemployment, and welfare in developing countries. International Review of Economics & Finance, 42: 103–115.
 
Pi J., Zhang P. (2017): Foreign capital, pollution control, and wage inequality in developing countries. International Review of Economics & Finance, 48: 280–288.
 
Pi Jiancai, Zhou Yu (2012): Public infrastructure provision and skilled–unskilled wage inequality in developing countries. Labour Economics, 19, 881-887 https://doi.org/10.1016/j.labeco.2012.08.007
 
Tawada Makoto, Sun Shuqin (2010): Urban Pollution, Unemployment and National Welfare in a Dualistic Economy. Review of Development Economics, 14, 311-322 https://doi.org/10.1111/j.1467-9361.2010.00554.x
 
Williams Roberton C. (2002): Environmental Tax Interactions when Pollution Affects Health or Productivity. Journal of Environmental Economics and Management, 44, 261-270 https://doi.org/10.1006/jeem.2001.1237
 
World Bank (2016): The cost of air pollution : strengthening the economic case for action. World Bank, Washington D.C. 
 
Yanase Akihiko (2019): Tariff and Environmental Tax Reforms in a Polluted Small Open Economy with Public Production. FinanzArchiv, 66, 333- https://doi.org/10.1628/001522110X549253
 
download PDF

© 2019 Czech Academy of Agricultural Sciences