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The distributional effects of climate change. An empirical analysis

Author

Listed:
  • Haroon Mumtaz

    (Queen Mary University)

  • Angeliki Theophilopoulou

    (Brunel University London)

Abstract

The role of climate change on output has been studied extensively in the empirical literature. However, its distributional implications have received little attention. This paper attempts to fill this gap by investigating if climate shocks affect income inequality. Using a Vector Autoregression for a large cross-country panel, we identify the climate shock in the frequency domain as the shock that explains the bulkof the variance of climate variables in the long-run. An adverse climate shock is associated with an increase in measures of income inequality, affecting mostly low income households. The impact of the shock is larger in magnitude for low income, hot countries with a significant agricultural sector and low degree of adaptation to climate change.

Suggested Citation

  • Haroon Mumtaz & Angeliki Theophilopoulou, "undated". "The distributional effects of climate change. An empirical analysis," Working Papers 966, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:966
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    References listed on IDEAS

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    3. Ravaioli, Giacomo & Lamperti, Francesco & Roventini, Andrea & Domingos, Tiago, 2025. "Tackling emissions and inequality: policy insights from an agent-based model," Journal of Economic Behavior & Organization, Elsevier, vol. 237(C).
    4. Paulo M.M. Rodrigues & Dhruv Akshay Pandit & Miguel de Castro Neto, 2025. "Socio-economic sensitivity to weather extremes: A scoping review of European research," Working Papers w202527, Banco de Portugal, Economics and Research Department.
    5. Albanese, Marina & Caporale, Guglielmo Maria & Colella, Ida & Spagnolo, Nicola, 2025. "The effects of physical and transition climate risk on stock markets: Some multi-Country evidence," International Economics, Elsevier, vol. 181(C).
    6. Francesco Jacopo Pintus & Jan P.A.M. Jacobs & Elmer Sterken, 2024. "Fiscal Impacts of Climate Anomalies," CAMA Working Papers 2024-74, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    7. Le, Anh H. & Park, Donghyun & Beirne, John & Uddin, Gazi Salah, 2025. "How does disaster risk impact fiscal sustainability and inequality?," Economic Modelling, Elsevier, vol. 151(C).
    8. Wang, Fei & Yu, Xiaohua, 2025. "Climate and household food waste in China," Food Policy, Elsevier, vol. 135(C).
    9. Guglielmo Maria Caporale & Anamaria Diana Sova & Robert Sova, 2025. "Climate Risk and Financial Stability: Some Panel Evidence for the European Banking Sector," CESifo Working Paper Series 11958, CESifo.
    10. Gazi Salah Uddin & Anh H. Le & Naoki Yago & John Beirne & Donghyun PARK, "undated". "Global Fragmentation, Fiscal Policy, and Economic Growth: A Cross-country Analysis," Working Papers wp62, South East Asian Central Banks (SEACEN) Research and Training Centre, revised Feb 2026.
    11. Naveen Kumar & Dibyendu Maiti, 2025. "Distributional impacts of global warming on wealth inequality: evidence from global panel of regions," Empirical Economics, Springer, vol. 69(6), pages 3889-3933, December.

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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