This note shows that the assumptions about the abatement technology modify the impact of the environmental taxation on the long-run growth driven by human capital accumulation à la Lucas (1988), when lifetime is finite. Whereas no impact of the environmental policy on long-run growth is found when pollution originates from final output and abatement is an activity requiring final output to reduce net emissions, this note demonstrates that a tighter environmental tax enhances human capital accumulation when it is assumed that abatement services are produced with physical capital.
"Environmental Policy, Education and Growth with Finite Lifetime: the Role of Abatement Technology"
(May 27, 2010).
Fondazione Eni Enrico Mattei Working Papers.
Working Paper 459.