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This article examines pollution and environmental mortality in an economy where fertility is endogenous and output is produced from labor and capital by two sectors, dirty and clean. An emission tax curbs dirty production, which decreases pollution-induced mortality but also shifts resources to the clean sector. If the dirty sector is more capital intensive, then this shift increases labor demand and wages. This, in turn, raises the opportunity cost of rearing a child, thereby decreasing fertility and the population size. Correspondingly, if the clean sector is more capital intensive, then the emission tax decreases the wage and increases fertility. Although the proportion of the dirty sector in production falls, the expansion of population boosts total pollution, aggravating mortality.

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Paper presented in the following conferences:

1. “Systems Analysis: Modelling and Control”, Krasovskiy Institute of Mathematics and Mechanics, Ekaterinburg, Russia, October 2016
2. The 6th Viennese Vintage Workshop, Vienna University of Technology, Austria, December 2016

Abstract. I examine how globalization affects wages and welfare in a general equilibrium model of international trade with partly oligopolistic markets. Globalization is modeled as reducing trade costs or opening up shielded sectors to trade. There is a national or international common agency that determines minimum wages for the oligopolists, either directly or through supporting labor unions. The lobbies of employers and labor unions influence that agency, relating their prospective political contributions to the latter’s decisions. Both a shift from national to international regulation and a decrease in trade costs promote aggregate welfare, but decrease open-sector relative wages.

Earlier version “Globalization, Union Influence and Self-Interested Labor Market Regulators”, presented in  the DEGIT XX Conference in Geneva, Switzerland, 2015

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Abstract. Heterogeneous countries produce goods from fixed resources and emitting inputs that cause simultaneous localized and global externality problems (e.g. smog and global warming). Since there is no benevolent international government, the issue of emission permits is delegated to an international self-interested regulator whom the countries try to influence. A single country can exceed its emission permits with a fixed penalty. In this setup, this article shows that emission trading is welfare diminishing, because it grants less (more) permits to countries with relatively clean (dirty) localized technology.

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This document is a literature review of sustainable growth. Because there are many definitions of sustainable growth, we use the following one that is very common in economics. Economic growth is ‘sustainable’, if it meets the needs of the present generations without compromising the ability of future generations to meet their own needs. This concerns both the availability of resources for future generations and the environmental impacts of current decisions on future activities.

Section I, we consider issues and policy measures related to the resource problem. We introduce dynamic models in which exhaustible resources are used in production and apply them to several cases: an open economy, a backstop technology and the relationship of climate and economic growth. We also examine a transition of dirty to clean technology and the consequences of this to public finance and intergenerational equity.

In Section II, we consider macroeconomic performance with natural resources: origins and effects of resource abundance, patterns of development for world prices, resource depletion, peak production, “Dutch disease” and external debt. If economic growth affects environment, then the abatement of environmental damages must be included into the discussion of sustainable economic growth.

In Section III, we present resource extraction and the environmental impacts of economic activities in the context of multiple decision makers. This introduces strategic interactions of agents, e.g. firms, households and nations. We consider collusion as well as Cournot, Bertrand games and discuss on diverse micro and macro policies that consider incentive compatibility.

In the Appendix, we introduce a finite horizon procedure called Nonlinear Model Predictive Control (NMC) by which the models presented in this survey can be numerically solved.

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Abstract. Consider an economy where oligopolists employ skilled and unskilled labour in production and escape production costs by devoting skilled labour to R&D. Employers and workers bargain over wages and lobby the local policy maker that determines union bargaining power. The main results are the following. When the elasticity of factor substitution exceeds the elasticity of product substitution, the labour markets are deregulated. When labour market policy is left at the local level in an otherwise integrated economy, the likelihood of labour market deregulation increases. This result explains the past development of declining union bargaining power in wage settlement.

Earlier version: The Political Economy of Labour Market Regulation with R&D. HECER Discussion Paper No. 375 (2013)

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Presented in:

DEGIT Conference, Nasville (TN), USA

13th Viennese Workshop on Optimal Control and Dynamic Games, Wien, Austria

In this document, we consider the effects of a land reform on economic and demographic growth by a family-optimization model with sharecropping, endogenous fertility and status
seeking. We show that tenant farming is the major obstacle to escaping the Malthusian trap with high fertility and low productivity. A land reform provides peasant families higher returns for their investments in land, encouraging them to increase their productivity of land rather than their family size. This decreases fertility and increases productivity in agriculture in the short and long runs. The European demographic history provides supporting evidence for this.

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