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Environmental Modeling & Assessment

, Volume 19, Issue 2, pp 85–98 | Cite as

Human Capital, Innovation, and Climate Policy: an Integrated Assessment

  • Carlo Carraro
  • Enrica De Cian
  • Massimo Tavoni
Article

Abstract

This paper looks at the interplay between human capital and innovation when climate and educational policies are implemented. Following recent empirical studies, human capital and general purpose research and development (R&D) are introduced in an integrated assessment model used to study the dynamics of climate change mitigation. Our results suggest that climate policy stimulates general purpose as well as clean R&D but reduces the incentive to invest in human capital formation. Both innovation and human capital have a scale effect, which increases pollution, as well as a technique effect, which saves emissions for each unit of output produced. While the energy-saving effect prevails when innovation increases, human capital is pollution-using, also because of the gross complementarity between the labor and energy input. When the role of human capital is the key input in the production of general purpose and energy knowledge is accounted for, the crowding-out of education induced by climate policy is mitigated, though not completely offset. By contrast, a policy mix that combines educational as well as climate objectives offsets the human capital crowding-out, at moderate and short-term costs. Over the long run, the policy mix leads to global welfare gains.

Keywords

Climate policy Innovation Human capital 

JEL Classification

O33 O41 Q43 

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Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  • Carlo Carraro
    • 1
    • 2
    • 3
  • Enrica De Cian
    • 1
    • 2
  • Massimo Tavoni
    • 1
    • 2
  1. 1.Fondazione Eni Enrico Mattei (FEEM)VeniceItaly
  2. 2.Euro-Mediterranean Center on Climate Change (CMCC)VeniceItaly
  3. 3.Cà Foscari University of VeniceVeniceItaly

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