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Income inequality and carbon consumption: Evidence from Environmental Engel curves

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  • Sager, Lutz

Abstract

I investigate the relationship between income inequality and the carbon dioxide (CO2) content of consumption. I quantify the CO2 content of household expenditure using input-output analysis and estimate Environmental Engel curves (EECs) which describe the income–emissions relationship. Using EECs for the United States between 1996 and 2009, I decompose the change in CO2 over time and the distribution of emissions across households. In both cases, income is an important driver of household carbon. Finally, I describe a potential “equity-pollution dilemma”—progressive income redistribution may raise the demand for aggregate greenhouse gas emissions. I estimate that transfers raise emissions by 5.1% at the margin and by 2.3% under complete redistribution.

Suggested Citation

  • Sager, Lutz, 2019. "Income inequality and carbon consumption: Evidence from Environmental Engel curves," Energy Economics, Elsevier, vol. 84(S1).
  • Handle: RePEc:eee:eneeco:v:84:y:2019:i:s1:s0140988319302968
    DOI: 10.1016/j.eneco.2019.104507
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    Cited by:

    1. Uddin, Md. Main & Mishra, Vinod & Smyth, Russell, 2020. "Income inequality and CO2 emissions in the G7, 1870–2014: Evidence from non-parametric modelling," Energy Economics, Elsevier, vol. 88(C).
    2. Never, Babette & Albert, Jose Ramon & Fuhrmann, Hanna & Gsell, Sebastian & Jaramillo, Miguel & Kuhn, Sascha & Senadza, Bernardin, 2020. "Carbon consumption patterns of emerging middle classes," Discussion Papers 13/2020, German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE).
    3. de Miguel, Carlos & Filippini, Massimo & Labandeira, Xavier & Labeaga, José M. & Löschel, Andreas, 2019. "Low-carbon Transitions: Economics and Policy," Energy Economics, Elsevier, vol. 84(S1).
    4. Yulin Liu & Min Zhang & Rujia Liu, 2020. "The Impact of Income Inequality on Carbon Emissions in China: A Household-Level Analysis," Sustainability, MDPI, Open Access Journal, vol. 12(7), pages 1-22, March.

    More about this item

    Keywords

    Inequality; Consumption; Pollution; Redistribution;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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