LAUSR

Abstract This paper established a small open general equilibrium model to investigate the effects of the changes of consumers' unit private mitigation expenditure on the unemployment rate and the urban-rural wage inequality etc.. We found that (1) in the capital specific case, the increase of unit private mitigation expenditure will not only increase the urban unemployment rate but also expend the urban-rural wage inequality; (2) in the capital movable case, the conclusions are exactly opposite to that of the capital specific case. And under certain conditions, the increase of unit private mitigation expenditure may improve national income. According to the parameter calibration and numerical simulation results of the relevant macroeconomic data of China in 2017, we also found that (3) the effects of the changes of unit private mitigation expenditure on the urban unemployment rate is greater than that of the urban-rural wage inequality; (4) the influence degree of the changes of unit private mitigation expenditure on the unemployment rate in the capital movable case is greater than that of the capital specific case, but the influence degree of the change of unit private mitigation expenditure on the urban-rural wage inequality in the capital movable case is smaller than that of the capital specific case.