Longevity and environmental quality in an OLG model
(2010) Journal of Economics — Vol. 100, n° 3, p. 191-216 (2010)
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- Abstract
- Whereas existing OLG models with endogenous longevity neglect the impact of environmental quality on mortality, this paper studies the design of the optimal public policy in a two-period OLG model where longevity is influenced positively by health expenditures, but negatively by pollution due to production. It is shown that if agents, when choosing how much to spend on health, do not internalize the impact of their decision on environmental quality (i.e. the space available for each person), the decentralization of the social optimum requires a tax not only on capital income (to internalize the pollution externality), but also, on health spending (to internalize the congestion externality). We also examine the second-best policy under a limited set of taxation instruments, and explore its sensitivity to the pollution process and to individual preferences.
- Affiliations
Université Paris Ouest EconomiX Université de Liège CREPP Paris School of Economics
Citations
Jouvet, P.-A., Pestieau, P., & Ponthière, G. (2010). Longevity and environmental quality in an OLG model. Journal of Economics, 100(3), 191-216. https://doi.org/10.1007/s00712-010-0142-3 (Original work published 2010)