The paper incorporates manufacturing and agricultural pollution into a three-sector general equilibrium model with pollution externalities both on agricultural production and labour health. Manufacturing generates pollution that affects agricultural production and health, while agriculture employs the pollutant as a factor for production that only affects health. Under the framework, this paper investigates the impacts of environmental protection policies and a rise in the self-mitigation cost of skilled and unskilled labour on wage inequality. A larger environmental tax expands wage gap if partial elasticity of substitution between labour and dirty input in the urban unskilled sector is small enough. More restrictive agricultural pollutants control narrows down the wage gap. The impact of an increase in the self-mitigation cost of skilled labour on wage inequality is ambiguous, depending on the factors substitution in agriculture and the elasticity of manufacturing pollution on agricultural production, while a larger self-mitigation cost of unskilled labour brings down the wage gap.
Much literature finds that migrants' remittances have positive effects on the labor-outsourcing regions; however, it should be noted that the massive funds outflow from the labor host regions poses an impact on these regions as well. Moreover, the existing literature sheds little light on the theoretical study of remittances within one economy. This article theoretically analyzes the economic impact of migrants' remittances on the labor host regions, the urban regions, and establishes a three-sector general equilibrium model to investigate the impacts of an increase in remittances on wage, employment and welfare level in the urban regions from the short-and longterm perspectives. We find that an increase in remittances will reduce the output of the informal sector and decrease urban residents' welfare in the short term, while it will increase the output of the informal sector and augment urban residents' welfare in the long term.
JEL Classification
This article incorporates the public intermediate input in a dynamic model with two final private sectors and a public sector and investigates impacts of an inflow of skilled and unskilled labour on wage inequality. The public intermediate input can be accumulated and its accumulated stock serves as a public input for private production. From the analysis, in the steady state equilibrium, an increase in the skilled and unskilled labour endowment raise the stock of public intermediate input. Also, an inflow of skilled labour reduces the wage of skilled labour and raises the wage of unskilled labour, and an inflow of unskilled labour increases both the wages of skilled and unskilled labour. Concerning their impacts on the wage inequality, an inflow of skilled labour decreases the wage inequality, while the result of an inflow of unskilled labour on wage inequality is ambiguous. If the production elasticity of the public intermediate input stock in the skill-using sector is small enough, an inflow of unskilled labour narrows down wage inequality.
ARTICLE HISTORY
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