Private Mitigation, Unemployment Rate, and Wage Inequality in the Presence of Agricultural Pollution

This chapter establishes a small open general-equilibrium model to investigate the effects of changes in consumers’ unit private mitigation expenditure on the unemployment rate and urban-rural wage inequality, among other factors. We find that in the capital-specific case, an increase in unit private mitigation expenditure not only increases the urban unemployment rate but also expends urban-rural wage inequality. In the capital movable case, the conclusions are exactly opposite to those of the capital-specific case. Furthermore, under certain conditions, an increase in unit private mitigation expenditure may improve national income. According to parameter calibration and numerical simulation results using relevant macroeconomic data from China in 2017, we also find that the effects of changes in unit private mitigation expenditure on the urban unemployment rate are greater than those on the urban-rural wage inequality; the degree of influence of changes in unit private mitigation expenditure on the unemployment rate in the capital movable case is greater than that in the capital-specific case, but the degree of influence of changes in unit private mitigation expenditure on urban-rural wage inequality in the capital movable case is smaller than that in the capital-specific case.