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The Trade-off Between Income Inequality and Carbon Dioxide Emissions

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  • Grunewald, Nicole
  • Klasen, Stephan
  • Martínez-Zarzoso, Inmaculada
  • Muris, Chris

Abstract

We investigate the theoretically ambiguous link between income inequality and per capita carbon dioxide emissions using a panel data set that is substantially larger (in both regional and temporal coverage) than those used in the existing literature. Using an arguably superior group fixed effects estimator, we find that the relationship between income inequality and per capita emissions depends on the level of income. We show that for low and middle-income economies, higher income inequality is associated with lower carbon emissions while in upper middle-income and high-income economies, higher income inequality increases per capita emissions. The result is robust to the inclusion of plausible transmission variables.

Suggested Citation

  • Grunewald, Nicole & Klasen, Stephan & Martínez-Zarzoso, Inmaculada & Muris, Chris, 2017. "The Trade-off Between Income Inequality and Carbon Dioxide Emissions," Ecological Economics, Elsevier, vol. 142(C), pages 249-256.
    • Handle: RePEc:eee:ecolec:v:142:y:2017:i:c:p:249-256
    DOI: 10.1016/j.ecolecon.2017.06.034
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    More about this item

    Keywords

    Environmental Quality; Income Inequality; Panel Data;
    All these keywords.

    JEL classification:

    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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