A Spatial Overlapping Generations Model with Environmental and Human Capital Externalities Evidence from European Regions (1995–2025)

ZENAGUI, Sid Ahmed (2026): A Spatial Overlapping Generations Model with Environmental and Human Capital Externalities Evidence from European Regions (1995–2025).

Abstract

This paper develops a spatial Overlapping Generations (OLG) model to analyze the interactions between human capital, environmental quality, and regional dynamics in shaping intergenerational quality of life (QoL) across European regions from 2000 to 2025. Using a rich dataset of regional economic, social, and environmental indicators harmonized at the NUTS-2 level, the model incorporates human capital and pollution spillovers, household utility, and regional policy interventions. Empirical results reveal that intergenerational persistence of human capital and environmental externalities significantly influence long-term welfare, while spatial interactions reinforce core–periphery disparities. Counterfactual simulations of education investments, carbon pricing, green R&D, and EU cohesion policies demonstrate that integrated multi-sector interventions maximize aggregate welfare, reduce inequality, and enhance spatial convergence. The findings highlight important policy trade-offs across generations and underscore the relevance of coordinated environmental, educational, and redistribution policies for sustainable and equitable regional development.

• Item Type: MPRA Paper
• Language: English
• Keywords: Intergenerational Quality of Life, Human Capital, Environmental Externalities, Spatial Spillovers, Overlapping Generations Model, EU Regional Policy
• Subjects: A - General Economics and Teaching > A1 - General Economics > A10 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

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