Francesco Nicolli (University of Ferrara) (webinar)

“Inequality, technological change and the environment”

Abstract: This work re-examines the relationship between income per-capita, inequality and per capita emissions accounting for non-homotheticity in green preferences and nonlinearities in the impact of economic growth on GHG emissions. Theoretically, our research is motivated by the fact that, if environmental quality is a need with low priority in the hierarchical scale, the effect of inequality on emissions vary depending on the level of income per capita. Particularly, for a given level of income per capita, a richer median voter will be more willing to approve more stringent environmental policies and thus a lower inequality is beneficial for the environment. With non-homothetic preferences, the beneficial environmental effect of reducing inequality emerges only for countries that are sufficiently rich. We test this hypothesis augmenting a standard EKC equation including the interaction between income per capita and the Gini coefficient. Our results for CO2, SO2 and N2O emissions corroborate our main hypothesis: reducing inequality is beneficial for the environment only for rich countries.