UNEMPLOYMENT, TRANS-BOUNDARY POLLUTION, AND ENVIRONMENTAL POLICY IN A DUALISTIC ECONOMY

This study is intended to examine the effects of environmental policies on employment, the use of polluting goods, and the unemployment rate under a model introducing trans-boundary pollution affecting the productivity of the other productive sectors. That model was designed by Copeland and Taylor (1999) , and transformed into a dualistic economy model constructed by Harris and Todaro (1970) . Results of our analyses show that enforcement of environmental policy through control of emissions taxes does not necessarily worsen urban unemployment. Therefore, we show that it is not usually proper to maintain that some environmental pollution cannot be avoided to establish economic development. Moreover, we analyze the effect of some environmental policies on social welfare and discuss the effectiveness of those policies.