Environmental standard and employment: impact of productivity effect.

Sen, Anindita; Acharyya, Rajat

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.

ENVIRONMENTAL standards; EMPLOYMENT; ECONOMIC equilibrium; ECONOMIC efficiency; ECONOMIC demand; LABOR productivity; PARAMETER estimation

Environment & Development Economics, 2012, Vol 17, Issue 2, p207

1355-770X

Academic Journal

10.1017/S1355770X11000337