Does income inequality facilitate carbon emission reduction in the US?

Abstract

Considering the short- and long-term impacts of income inequality on carbon emissions, as well as the heterogeneity of the emission distribution, this paper employs panel ARDL and quantile regression models to analyze the effect of income inequality on carbon emissions across US states. The findings suggest that higher income inequality increases US carbon emissions in the short term, whereas it promotes carbon reduction in the long term. Furthermore, we find that the absolute values for the coefficients on income inequality in the states from the 70th to the 90th quantiles are larger than those from the 10th to the 40th quantiles. This indicates that income inequality reduces more carbon emissions in states with higher per capita carbon emissions. The results provide important insights for policy makers to improve the quality of economic development and address climate change.