Environmental effectiveness of tax compliance policy in the presence of labor unions

Abstract

This paper investigates the impact of a stricter tax compliance policy on firms’ pollution emissions in the presence of labor market frictions. In contrast to a situation with perfect labor markets, we find that under the right‐to‐manage wage formation, a stricter compliance policy increases emissions when the shadow cost of the emission limit is excluded, whereas it has no impact when the shadow cost is included. With efficient bargaining, a stricter compliance policy decreases (or increases) pollution emissions under employment (wage) orientation but has no impact on pollution emissions under wage neutrality.

Mitigating China's water scarcity and pollution : environmental and economic accounting, modelling and policy analysis

“…The other type of parameter is the elasticity parameters, such as elasticity of substitution between production factors, Armington elasticity, and CET elasticity, which are all fixed exogenously based on previous studies (Dervis et al, 1982;Zhuang, 1996;Xue, 1998;Zheng and Fan, 1999;He et al, 2002;Wu and Xuan, 2002;Zhai, 2005;Willenbockel, 2006). In this study, the CET elasticity between export and domestic demand equals 4, the Armington elasticity between imported goods and domestic supply equals 2 and CES elasticity between labour and capital lies between 0.1 and 1 for the different production sectors.…”