The great transition: Implication from environmental policy on the quality-quantity trade-off on children
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چکیده
We develop an overlapping-generations model with human capital accumulation and endogenous fertility containing a pollution externality. In such a framework, we study the effects of an environmental policy change on individuals’ quality-quantity trade-off on children. In a Malthusian poverty trap, we show that a more stringent policy induces a reduction of the fertility rate. In a state of perpetual development, however, not only is this policy likely to have a positive effect on fertility, but we also obtain that environmental quality, growth, and welfare are compatible goals. Moreover, we show that an abatement pollution policy can be used as an instrument for initiating a country’s “great transition” from a state of poverty to a state of
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