An understanding on the relationship between the employment and the environmental policy

ABSTRACT

This study proposes a bridge between traditional production technology and pollution abatement technology. It is assumed that a positive externality from pollution abatement improves the productivity of the production factor and thus externality can explain the effects of the environmental policy on job creation. Furthermore, this study proposes some viable remedial steps for policy-makers which would enable them to design a more effective policy by taking into account both the direction of technology advancement and the current level of pollution abatement technology, which are considered to be important for firms to increase their labour demand.

KEYWORDS:

• Environmental policy
• job creation
• production technology
• pollution abatement activity
• positive externality
• technical advancement

JEL Classifications:

• Q52
• Q55
• Q58

Acknowledgments

We express our thanks to anonymous referees of the journal for their constructive comments.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Refer to Palmer, Oates, and Portney (1995).

2. For example, Getzner (2002), Rennings, Ziegler, and Zwick (2004), Horbach (2010) and Horbach and Rennings (2013).

3. Examples are the change of energy system from the fossil to the renewable or the full-scale substitution of previous process line.

4. Refer to Getzner (2002), Rennings, Ziegler, and Zwick (2004), Horbach (2010) and Horbach and Rennings (2013).

5. Here, represents the degree of contribution of emitted pollution to total production because .

6. Because we are interested in the labour demand increase, we focus only on labour input change.

7. The derivation of Equation (11(11) ) is provided in Appendix 2.

8. .

Additional information

Funding

This work was supported by a National Research Foundation of Korea grant funded by the Korean Government [grant number NRF-2013S1A3A2055150].