UNEMPLOYMENT AND THE BACKWARD INCIDENCE OF POLLUTION-CONTROL

This paper reexamines the backward incidence of pollution control using duality theory for a two-sector general equilibrium model in which the economy experiences large-scale unemployment and perfect capital mobility with a sector-specific rigid wage in the polluting sector. In this context it is shown that with stricter pollution controls the wage rate in the nonpolluting sector rises while the common rental rate falls. In addition, stricter pollution controls are shown to have an uncertain impact on national income. © 1990.