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Climate Change and Income Inequalities

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  • George Petrakos
  • Kleoniki Natalia Petrou

Abstract

This paper examines the relation between climate change and income inequality, providing evidence that they are mutually interacting and reinforcing each other. The paper uses Three Stages Least Squares (3SLS) panel models for 167 countries for the period of 1990–2022 in order to account for the endogenous character of inequality (both within and between countries) and climate change (CO2 emissions per capita) by estimating the direct and indirect effects of key market and policy drivers. The evidence suggests that environmental degradation increases inequality, as the low end of the income distribution is affected more and has limited capability to protect itself. It also suggests that inequality may affect environmental degradation in a non‐linear or conditional way, where the level of inequality and the level of development determine the direction of the impact.

Suggested Citation

  • George Petrakos & Kleoniki Natalia Petrou, 2026. "Climate Change and Income Inequalities," Sustainable Development, John Wiley & Sons, Ltd., vol. 34(S1), pages 341-363, January.
    • Handle: RePEc:wly:sustdv:v:34:y:2026:i:s1:p:341-363
    DOI: 10.1002/sd.70175
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