Abstract
ABSTRACT We set up a theoretical model to analyze the effects of environmental policy and trade policy on pollution and unemployment. We find that the level of global pollution would fall due to a rise in the environment tax and prove that if the external effect dominates the direct effect then a rise in the environment tax would lead to a reduction in the unemployment rate, and vice versa. In addition, we claim that if the external effect dominates the trade effect then the trade liberalization policy will lead to a reduction in the unemployment rate, and vice versa.
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