Relief for the Environment? The Importance of an Increasingly Unimportant Industrial Sector

Swiss Institute for Business Cycle Research (KOF) Working Paper No. 130

47 Pages Posted: 21 Mar 2006

See all articles by Martin Gassebner

Martin Gassebner

ETH Zurich - KOF Swiss Economic Institute; CESifo (Center for Economic Studies and Ifo Institute)

Noel Gaston

University of South Australia

Michael J. Lamla

ETH Zurich - KOF Swiss Economic Institute; University of Essex

Multiple version iconThere are 2 versions of this paper

Date Written: March 2006

Abstract

Deindustrialisation, stagnant real incomes of production workers and increasing inequality are latter-day features of many economies. It's common to assume that such developments pressure policy-makers to relax environmental standards. However, when heavily polluting industries become less important economically, their political importance also tends to diminish. Consequently, a regulator may increase the stringency of environmental policies. Like some other studies, we find that declining industrial employment translates into stricter environmental standards. In contrast to previous studies, but consistent with our argument, we find that greater income inequality is associated with policies that promote a cleaner environment.

Keywords: environmental regulations, deindustrialisation, income inequality, extreme bounds analysis

JEL Classification: Q58, P16, J31, C23

Suggested Citation

Gassebner, Martin and Gaston, Noel and Lamla, Michael J., Relief for the Environment? The Importance of an Increasingly Unimportant Industrial Sector (March 2006). Swiss Institute for Business Cycle Research (KOF) Working Paper No. 130. Available at SSRN: https://ssrn.com/abstract=889036 or http://dx.doi.org/10.2139/ssrn.889036

Martin Gassebner

ETH Zurich - KOF Swiss Economic Institute ( email )

Weinbergstrasse 35
Zurich, 8092
Switzerland

HOME PAGE: http://www.kof.ethz.ch/chair/

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Noel Gaston (Contact Author)

University of South Australia ( email )

37-44 North Terrace
Adelaide SA 5000, South Australia 5001
Australia

Michael J. Lamla

ETH Zurich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

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