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The income-pollution relationship and the role of income distribution Evidence from Swedish household data

Author

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  • Brännlund, Runar

    () (Department of Economics, Umeå University)

  • Ghalwash, Tarek

    () (Department of Economics, Umeå University)

Abstract

The main purpose of this study is to analyze the relationship between pollution and income at household level. The study is motivated by the recent literature emphasizing the importanceof income distribution for the aggregate relation between pollution and income. The main findings from previous studies are that if the individual pollution-income relationship is nonlinear, then aggregate pollution for, say, a whole country, will depend not only on average income, but also on how income is distributed. To achieve our objective we formulate a model for determining the choice of consumption of goods in different types of household. Furthermore we link the demand model to emission functions for the various goods. The theoretical analysis shows that without imposing very restrictive assumptions on preferences and the emission functions, it is not possible to determine a priori the slope or the curvature of the pollution-income relation. The empirical analysis shows that, given the model used, thepollution-income relation has a positive slope in Sweden and is strictly concave for all three pollutants under study (CO2, SO2, NOx), at least in the neighborhood of the observed income for an average household. Further, the results show that the curvature of the relation differs between different types of households. We also show that altering the prevailing income distribution, holding average income constant, will affect aggregate emissions in the sense that an equalization of incomes will give rise to an increase in emissions. One implication is then that the development of aggregate pollution due to growth depends not only on the income level, but also on how growth is distributed.

Suggested Citation

  • Brännlund, Runar & Ghalwash, Tarek, 2006. "The income-pollution relationship and the role of income distribution Evidence from Swedish household data," Umeå Economic Studies 677, Umeå University, Department of Economics.
  • Handle: RePEc:hhs:umnees:0677
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    References listed on IDEAS

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    6. McCONNELL, KENNETH E., 1997. "Income and the demand for environmental quality," Environment and Development Economics, Cambridge University Press, vol. 2(04), pages 383-399, November.
    7. Ghalwash, Tarek, 2006. "Demand for Environmental Quality: An Empirical Analysis of Consumer Behavior in Sweden," Umeå Economic Studies 676, Umeå University, Department of Economics.
    8. Selden Thomas M. & Song Daqing, 1995. "Neoclassical Growth, the J Curve for Abatement, and the Inverted U Curve for Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 162-168, September.
    9. Bimonte, Salvatore, 2002. "Information access, income distribution, and the Environmental Kuznets Curve," Ecological Economics, Elsevier, vol. 41(1), pages 145-156, April.
    10. Lopez Ramon, 1994. "The Environment as a Factor of Production: The Effects of Economic Growth and Trade Liberalization," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 163-184, September.
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    13. Heerink, Nico & Mulatu, Abay & Bulte, Erwin, 2001. "Income inequality and the environment: aggregation bias in environmental Kuznets curves," Ecological Economics, Elsevier, vol. 38(3), pages 359-367, September.
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    Cited by:

    1. Valeria Costantini & Francesco Crespi & Giovanni Marin & Elena Paglialunga, 2016. "Eco-innovation, sustainable supply chains and environmental performance in European industries," LEM Papers Series 2016/19, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. Marbuah, George & Amuakwa-Mensah, Franklin, 2017. "Spatial analysis of emissions in Sweden," Energy Economics, Elsevier, vol. 68(C), pages 383-394.
    3. Unmesh Patnaik & Santosh K. Sahu, 2016. "The Tradeoffs between GHGs Emissions, Income Inequality and Productivity," Working Papers id:10882, eSocialSciences.
    4. Andrea Baranzini & Stefano Carattini, 2017. "Effectiveness, earmarking and labeling: testing the acceptability of carbon taxes with survey data," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(1), pages 197-227, January.
    5. repec:gam:jsusta:v:9:y:2017:i:9:p:1563-:d:110715 is not listed on IDEAS
    6. Nikodinoska, Dragana & Schröder, Carsten, 2015. "On the emissions-inequality trade-off in energy taxation: Evidence on the German car fuel tax," Discussion Papers 2015/6, Free University Berlin, School of Business & Economics.

    More about this item

    Keywords

    Household demand; Environmental Kuzents curve; Environmental emissions; Income distribution;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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