Air pollution, general government public-health expenditures and income inequality: Empirical analysis based on the spatial Durbin model

Abstract

Environmental pollution and income inequality are important issues related to sustainable economic and social development. Air pollution affects residents’ physical health, and income inequality affects social stability and economic development. No scholar has yet confirmed the causal impact of air pollution on income inequality; therefore, this study is an important extension of the environmental Kuznets curve theory. This article examines the impact using balanced panel data from 156 countries (2004–2017) and applies the spatial Durbin model to analyze the mechanism of air pollution’s impact on income inequality from the perspective of public health. The results prove the following. First, increasing air pollution does increase income inequality. Second, the spatial spillover effect of air pollution constitutes a relatively important part of the total effect of air pollution on income inequality compared with the direct effect. Third, general government public-health expenditures are an important transmission channel by which air pollution affects income inequality. The conclusions of the research have some important policy implications for environmental governance and income distribution policies at the national as well as supranational level.