A Theory of Empowering Labor and Protecting the Environment

Much of economic theory suggests that the interests of workers run afoul of environmental regulations and conservation. Supposedly, environmental regulations often impose additional costs on firms; they tend to reduce incentives to hire labor, reducing wages and employment. This essay seeks to challenge this conventional view by showing how empowering labor is a tool for mitigating pollution using a bargaining framework. Thus, the interests of labor and protecting the environment can align depending on the characteristics of production and the behavior of pollution with respect to output.

JEL Classification: J00, Q52, Q57