TY - JOUR
T1 - Open access renewable resources, urban unemployment, and the resolution of dual institutional failures
AU - Daitoh, Ichiroh
AU - Tarui, Nori
N1 - Funding Information:
Daitoh is grateful for the financial support from JSPS KAKENHI Grant Numbers JP16K03654 and JP24530241 (Grant-in-Aid for Scientific Research(C)) and Keio Gijyuku Academic Development Funds (2013, 2018). 1
Publisher Copyright:
Copyright © The Author(s), 2021. Published by Cambridge University Press.
PY - 2022/8/16
Y1 - 2022/8/16
N2 - This paper investigates how poverty reduction and natural resource preservation can be simultaneously achieved in a small open dual economy with urban wage rigidity, open access rural resources, and rural-urban migration. An increase in the export tax rate on the rural resource good increases urban unemployment in both the short run and the long run with resource dynamics. Given the institutional failures, the first-best policy is an urban wage subsidy combined with either a rural wage subsidy at a lower rate or, if the urban output price is sufficiently high, a rural tax. When the institutional failures can be resolved endogenously, an increase in the export tax on the resource good can induce rural institutional change away from open access. However, tariff protection of urban manufacturing hinders such a rural institutional change.
AB - This paper investigates how poverty reduction and natural resource preservation can be simultaneously achieved in a small open dual economy with urban wage rigidity, open access rural resources, and rural-urban migration. An increase in the export tax rate on the rural resource good increases urban unemployment in both the short run and the long run with resource dynamics. Given the institutional failures, the first-best policy is an urban wage subsidy combined with either a rural wage subsidy at a lower rate or, if the urban output price is sufficiently high, a rural tax. When the institutional failures can be resolved endogenously, an increase in the export tax on the resource good can induce rural institutional change away from open access. However, tariff protection of urban manufacturing hinders such a rural institutional change.
KW - export tax on the resource good
KW - institutional change
KW - open access
KW - renewable resource
KW - rural-urban migration
KW - urban unemployment
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U2 - 10.1017/S1355770X21000334
DO - 10.1017/S1355770X21000334
M3 - Article
AN - SCOPUS:85120090070
SN - 1355-770X
VL - 27
SP - 316
EP - 332
JO - Environment and Development Economics
JF - Environment and Development Economics
IS - 4
ER -
