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RELIEF FOR THE ENVIRONMENT? THE IMPORTANCE OF AN INCREASINGLY UNIMPORTANT INDUSTRIAL SECTOR

Authors

  • MARTIN GASSEBNER,

    1. Gassebner: Researcher, ETH Zurich, KOF Swiss Economic Institute, WEH D4, Weinbergstrasse 35, CH-8092 Zurich, Switzerland. E-mail gassebner@kof.ethz.ch
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      We would like to thank Rodney Beard, Per Fredriksson, Jeff Kline, Shravan Luckraz, Dan Sasaki, Jan-Egbert Sturm, Leon Taylor, and two anonymous referees as well as participants of the Annual Meeting of the German Economic Association (2006) and of the seminars at the University of Adelaide, Bond University, the University of Groningen, and the University of Tokyo for their helpful comments. Responsibility for errors and omissions rests with the authors.

  • NOEL GASTON,

    1. Gaston: Professor, Globalisation and Development Centre and School of Business, Bond University, Gold Coast, Queensland 4229, Australia. E-mail ngaston@bond.edu.au
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      We would like to thank Rodney Beard, Per Fredriksson, Jeff Kline, Shravan Luckraz, Dan Sasaki, Jan-Egbert Sturm, Leon Taylor, and two anonymous referees as well as participants of the Annual Meeting of the German Economic Association (2006) and of the seminars at the University of Adelaide, Bond University, the University of Groningen, and the University of Tokyo for their helpful comments. Responsibility for errors and omissions rests with the authors.

  • MICHAEL J LAMLA

    1. Lamla: Researcher, ETH Zurich, KOF Swiss Economic Institute, WEH D4, Weinbergstrasse 35, CH-8092 Zurich, Switzerland. E-mail lamla@kof.ethz.ch
    Search for more papers by this author
    • *

      We would like to thank Rodney Beard, Per Fredriksson, Jeff Kline, Shravan Luckraz, Dan Sasaki, Jan-Egbert Sturm, Leon Taylor, and two anonymous referees as well as participants of the Annual Meeting of the German Economic Association (2006) and of the seminars at the University of Adelaide, Bond University, the University of Groningen, and the University of Tokyo for their helpful comments. Responsibility for errors and omissions rests with the authors.


Abstract

Deindustrialization, stagnant real incomes of production workers, and increasing inequality are latter day features of many economies. It is common to assume that such developments pressure policymakers 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. (JEL Q58, P16, J31, C23)

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