This paper investigates how a rise in the pollution tax rate may affect unemployment, migration and welfare in a Harris-Todaro (HT) model. We build a two-regional/two-sectorial model with imperfect labor markets, pollution externalities and non-homothetic preferences on polluting consumption. This analysis shows that frictional unemployment and non-homothetic preferences bring about inter-region wage differential. Thus, an economy almost always exhibits distortions in the absence of the government intervention. Green tax may exacerbate these distortions by generating spillovers, if the labor market is initially more frictional in the region where the subsistence level of the polluting good is the lowest one. Wages subsidies and transfers among regions are explored as the solution to remove distortions.