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Environmental standard and employment: impact of productivity effect

Published online by Cambridge University Press:  16 September 2011

Anindita Sen  and
Rajat Acharyya
Anindita Sen
Affiliation:
Department of Economics, Golapbag, University of Burdwan, Burdwan 713104, West Bengal, India. Email: tinnisen@yahoo.com
Rajat Acharyya
Affiliation:
Jadavpur University, Kolkata, India. Email: rajat.acharyya@gmail.com
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Abstract

This paper analyses the effect of environmental standards on aggregate employment in the presence of a productivity effect in a multi-sector general equilibrium framework of an open economy. The productivity effect is generated among the skilled and unskilled workers as an improvement in the environmental quality improves their health, leading to an increase in their productivity. Though the productivity effect initially lowers labour demand as labour requirement per unit of production falls, a standard may raise employment depending on the parametric configurations. In this paper, we identify the role of this productivity effect on the change in employment and show that it may actually improve the chances of an employment expansion.

Type
Research Article
Information
Environment and Development Economics , Volume 17 , Issue 2 , April 2012 , pp. 207 - 225
Copyright
Copyright © Cambridge University Press 2011

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