The Cost of Adjustment to Green Growth Policies : Lessons from Trade Adjustment Costs

Green growth policies confront firms and workers with adjustments that may create welfare costs for different segments of the population and cause reductions in near-term actual versus potential gross domestic product. There is little evidence on the cost of adjustment to climate change measures, and only limited evidence for more general environmental policies, especially in developing countries. Therefore, this paper canvasses the research on adjustment costs to trade policies to draw analogies and highlight differences compared with the potential impacts of green growth policies. Trade policies affect prices and work directly on technology choice. In the presence of adjustment costs, firms may experience impacts on wages, employment, and incentives to adopt alternative technologies. Both types of trade policy impacts may be amplified by technology availability and credit constraints. Many green growth policies are likely to work via the same mechanisms, that is, taxes on emissions or changes in technology requirements. However, trade liberalization is typically seen as offering higher total incomes, albeit with winners and losers. Green growth policies are thought of as welfare-enhancing at the collective level but may not be income-enhancing at the individual level. This implies much more difficulty in measuring the potential gains associated with green growth policies.

Bibliographic Details

Main Author:	Porto, Guido
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2012-10
Subjects:	ADJUSTMENT ASSISTANCE, ADJUSTMENT COST, ADJUSTMENT COSTS, ADJUSTMENT POLICIES, ADJUSTMENT PROCESS, AGGREGATE INCOME, AGRICULTURE, AVERAGE WAGE, AVERAGE WAGES, BARGAINING POWER, BENCHMARK, CAPITAL ACCUMULATION, CAPITAL MARKET, CAPITAL MARKETS, CAPITAL STOCK, CARBON, CARBON ENERGY, CHILD LABOR, CLIMATE CHANGE, COAL, CODES OF CONDUCT, COMPARATIVE ADVANTAGE, COMPETITIVE ADVANTAGE, COMPLIANCE COSTS, CONSUMERS, CREDIT CONSTRAINTS, DAMAGES, DEADWEIGHT, DEADWEIGHT LOSS, DEMOGRAPHIC, DEMOGRAPHICS, DEVELOPING COUNTRIES, DEVELOPING ECONOMIES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DISCOUNT RATE, DISCOUNTED VALUE, DISPLACED WORKERS, DRIVERS, EARNING, ECONOMETRICS, ECONOMIC ACTIVITY, ECONOMIC RESEARCH, EFFICIENCY WAGES, ELASTICITY, EMISSIONS, EMPIRICAL EVIDENCE, EMPLOYEE, EMPLOYMENT EFFECTS, EMPLOYMENT LEVELS, EMPLOYMENT RESEARCH, EMPLOYMENT SUBSIDIES, EMPLOYMENT TURNOVER, ENERGY EFFICIENCY, ENVIRONMENTAL, ENVIRONMENTAL DAMAGES, ENVIRONMENTAL POLICIES, ENVIRONMENTAL QUALITY, ENVIRONMENTAL RESOURCES, ENVIRONMENTAL STANDARDS, EQUILIBRIUM, EXPLOITATION, EXPORT MARKET, EXPORT-ORIENTED INDUSTRY, EXPORTS, EXTERNALITIES, EXTERNALITY, FACTOR MARKETS, FACTORS OF PRODUCTION, FAIR TRADE, FIRING COSTS, FIRM SURVEYS, FIXED CAPITAL, FIXED INVESTMENT, FOSSIL FUELS, FREE TRADE, FRICTIONAL UNEMPLOYMENT, GDP, GENERAL EQUILIBRIUM, GENERAL EQUILIBRIUM MODELS, GROWTH MODELS, GROWTH POLICIES, GROWTH POLICY, HOME COUNTRY, HOUSEHOLD INCOME, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HUMAN CAPITAL, HUMAN RIGHTS, HUMAN RIGHTS ISSUES, IMPROVED WORKING CONDITIONS, INCOME, INCOME INEQUALITY, INCOMES, INDUSTRY WAGE, INPUT PRICES, INSURANCE MARKETS, INTANGIBLE, INTERNATIONAL TRADE, INVESTMENT CLIMATE, IRREVERSIBILITY, JOB DISPLACEMENT, JOB TRAINING, JOBS, LABOR ADJUSTMENT, LABOR ADJUSTMENT COSTS, LABOR ALLOCATION, LABOR ALLOCATIONS, LABOR DEMAND, LABOR DISPLACEMENT, LABOR FORCE, LABOR MARKET, LABOR MARKET ADJUSTMENT, LABOR MARKET FLEXIBILITY, LABOR MARKET POLICIES, LABOR MARKET REFORM, LABOR MARKET REFORMS, LABOR MARKET RIGIDITIES, LABOR MARKET TURNOVER, LABOR MARKETS, LABOR MOBILITY, LABOR PRODUCTIVITY, LABOR REALLOCATION, LABOR REGULATIONS, LABOR SUPPLY, LABOR UNIONS, LABOUR, LABOUR ADJUSTMENT, LABOUR MARKET, LABOUR MARKET REGULATIONS, LABOUR MOVEMENTS, LONG-RUN EMPLOYMENT, MARGINAL PRODUCT, MARGINAL PRODUCTIVITY, MARKET DISTORTION, MARKET DISTORTIONS, MARKET LIBERALIZATION, MIDDLE-INCOME COUNTRIES, MINIMUM WAGE, MINIMUM WAGES, NEW MARKET, NEW MARKET OPPORTUNITIES, NOMINAL WAGES, OLDER WORKERS, OPTIMIZATION, OPTION VALUE, OUTPUTS, POLICY MAKERS, POLITICAL ECONOMY, POLLUTION, POLLUTION TAX, POTENTIAL GROSS DOMESTIC PRODUCT, PRESENT VALUE, PREVIOUS SECTION, PRODUCERS, PRODUCTION FUNCTION, PRODUCTION WORKER, PRODUCTIVE ACTIVITIES, PRODUCTIVE FIRMS, PRODUCTIVITY, PRODUCTIVITY GAIN, PRODUCTIVITY GAINS, PROFIT MAXIMIZATION, PROFIT SHARING, PROTECTED INDUSTRIES, PROTECTED INDUSTRY, QUOTAS, RATIONAL EXPECTATIONS, REAL WAGE, REAL WAGES, RENTS, SAFETY, SAFETY NET, SELLING PRICE, SKILL PREMIUM, SKILL PREMIUMS, SKILL UPGRADING, SOCIAL BENEFITS, STARTUP, STRUCTURAL ADJUSTMENT, SUSTAINABLE DEVELOPMENT, TARGETED EMPLOYMENT SUBSIDY, TAXATION, TERMS OF TRADE, TRADE LIBERALIZATION, TRADE POLICIES, TRADE POLICY, TRADE REFORMS, TRAINING COSTS, UNEMPLOYED, UNEMPLOYED WORKER, UNEMPLOYED WORKERS, UNEMPLOYMENT, UNEMPLOYMENT INSURANCE, UNEMPLOYMENT INSURANCE PROGRAM, UNEMPLOYMENT TRANSITION, UNPROTECTED SECTOR, UNSKILLED LABOR, UNSKILLED WORKERS, URUGUAY ROUND, UTILITY FUNCTION, VALUE OF OUTPUT, VERTICAL INTEGRATION, VOLATILITY, WAGE BARGAINING, WAGE DIFFERENTIALS, WAGE GROWTH, WAGE INCREASE, WAGE INCREASES, WAGE INEQUALITY, WAGE LEVELS, WAGE PREMIUM, WAGE PREMIUMS, WAGE STRUCTURE, WAGE SUBSIDIES, WAGES, WELFARE EFFECTS, WELFARE GAINS, WORKERS, WORKING CONDITIONS, WORLD TRADE, WTO, YOUNG WORKERS,
Online Access:	http://documents.worldbank.org/curated/en/2012/10/16862151/cost-adjustment-green-growth-policies-lessons-trade-adjustment-costs http://hdl.handle.net/10986/12079
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