IDEAS home Printed from https://ideas.repec.org/a/eee/poleco/v90y2025ipbs0176268025001065.html

The impact of income inequality on public environmental expenditure with green consumers

Author

Listed:
  • Cassin, Lesly
  • Melindi-Ghidi, Paolo
  • Prieur, Fabien

Abstract

This article analyzes the impact of income inequality on environmental policy in the presence of green consumers. We first perform an empirical analysis using a panel of European countries over the period 1995–2021. The results show a negative relationship between inequality and public environmental expenditure, which is weaker with higher inequality. We also find a negative correlation between environmental expenditure and green consumption, that highlights the substitutable nature of the relationship between the two variables. We next develop a model with two main ingredients: citizens with different income capacities have access to two commodities that differ in terms of environmental impact, and they vote on the environmental policy. In equilibrium, the population is divided into two groups, conventional vs green consumers. An increase in inequality raises the marginal cost of policy through size and composition effects. The higher the equilibrium tax, the larger the overall effect. This provides us with an explanation of the main empirical result.

Suggested Citation

  • Cassin, Lesly & Melindi-Ghidi, Paolo & Prieur, Fabien, 2025. "The impact of income inequality on public environmental expenditure with green consumers," European Journal of Political Economy, Elsevier, vol. 90(PB).
    • Handle: RePEc:eee:poleco:v:90:y:2025:i:pb:s0176268025001065
    DOI: 10.1016/j.ejpoleco.2025.102746
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0176268025001065
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejpoleco.2025.102746?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Anne Kesselring, 2023. "Willingness-to-Pay for Energy Efficiency: Evidence from the European Common Market," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(4), pages 893-945, December.
    3. Francisco Serranito & Donatella Gatti & Gaye-Del Lo, 2023. "Unpacking the green box: Determinants of Environmental Policy Stringency in European countries," Working Papers hal-04202808, HAL.
    4. Ambec, Stefan & De Donder, Philippe, 2022. "Environmental policy with green consumerism," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    5. Paolo Melindi‐Ghidi, 2018. "Inequality, educational choice, and public school quality in income‐mixing communities," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(6), pages 914-943, December.
    6. Gatti, Donatella, 2022. "Going green and (un)equal ? Political coalitions, redistribution, and the environment," Economic Modelling, Elsevier, vol. 116(C).
    7. repec:hal:cepnwp:hal-04208688 is not listed on IDEAS
    8. repec:hal:cepnwp:hal-04188866 is not listed on IDEAS

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:poleco:v:90:y:2025:i:pb:s0176268025001065. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505544 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.