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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, 2020. "Income inequality and carbon consumption: evidence from Environmental Engel curves," LSE Research Online Documents on Economics 102561, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:102561
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    6. Kornek, Ulrike & Klenert, David & Edenhofer, Ottmar & Fleurbaey, Marc, 2021. "The social cost of carbon and inequality: When local redistribution shapes global carbon prices," Journal of Environmental Economics and Management, Elsevier, vol. 107(C).
    7. Marion Leroutier & Philippe Quirion, 2021. "Tackling Transport-Induced Pollution in Cities: A case Study in Paris," Working Papers 2021.07, FAERE - French Association of Environmental and Resource Economists.
    8. Tovar Reanos, Miguel, 2020. "Car ownership and the distributional and environmental policies to reduce driving behavior," Papers WP673, Economic and Social Research Institute (ESRI).
    9. Gregor Semieniuk & Victor M. Yakovenko, 2020. "Historical Evolution of Global Inequality in Carbon Emissions and Footprints versus Redistributive Scenarios," Papers 2004.00111, arXiv.org.
    10. 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).
    11. 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).
    12. Marco Baudino, 2020. "Environmental Engel curves in Italy: A spatial econometric investigation," Papers in Regional Science, Wiley Blackwell, vol. 99(4), pages 999-1018, August.
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    14. 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.

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    More about this item

    Keywords

    consumption; inequality; pollution; redistribution;
    All these keywords.

    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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