Wealth heterogeneity and escape from the poverty-environment trap

Masako Ikefuji, Ryo Horii

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)

Abstract

A mutual link between poverty and environmental degradation is examined in an overlapping generations model. Environmental quality affects labor productivity and wealth dynamics, whereas wealth distribution determines the degree to which agents rely on technology that has a large environmental load, and therefore the evolution of environmental quality. This interaction creates a "poverty-environment trap," where a deteriorated environment lowers income, which, in turn, accelerates environmental degradation. We show that greater wealth heterogeneity is the key to escaping from the poverty-environment trap, although it can have negative effects on both the environment and output when not in the trap.

Original languageEnglish
Pages (from-to)1041-1068
Number of pages28
JournalJournal of Public Economic Theory
Volume9
Issue number6
DOIs
Publication statusPublished - 2007 Dec

ASJC Scopus subject areas

  • Finance
  • Sociology and Political Science
  • Economics and Econometrics

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