Employment Double Dividend and Wage Determination

Abstract : This paper investigates the double dividend issue in a general equilibrium model of a closed economy in which polluter are firms and households, and firms are monopolistic competitors on the non polluting good market. We compare the effects of the reform on employment for two non-competitive labor-market scenarios: a wage bargaining model and an efficiency wage model. Moreover, three characteristics of the unemployment benefits are considered: fixed in real terms, indexed to production price or fixed replacement ratio. It is shown that if environmental taxes pre-exist, such a reform can boost employment if and only if at least households energy consumption is taxed regardless the unemployment scenarios. Moreover the reform yields more easily a second dividend if wages are negotiated than in efficiency wage model. Finally, the maximum level of initial environmental taxes rates compatible with an employment dividend depends on the characteristics of the unemployment benefits.
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Mireille Chiroleu-Assouline, Lionel Lemiale. Employment Double Dividend and Wage Determination. 2001, http://mse.univ-paris1.fr/MSEFramCahier2001.htm. ⟨hal-00471276⟩

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