Income Inequality and the Environment: Mechanisms, Empirics and Policy

Abstract

Income inequality and environmental degradation are two growing threats that received significant attention from the international community at the onset of the twenty-first century. While growing concerns about income inequality have become dominant in science, policy, and society since the 1980s, environmental deterioration has been significantly accelerating since the 1950s in most countries worldwide. In this regard, the question of whether these two crises are linked becomes highly important from the environmental policy perspective as the balance of power between the poor and the rich determines the level of environmental degradation. However, despite many different theoretical and empirical studies, a clear consensus regarding the relationship between these two challenges has not yet been reached. The main objective of this chapter is to review and discuss the theoretical and empirical explanations linking income inequality and environmental deterioration by addressing some key issues. To this end, we seek to answer the following questions: how does the distribution of income affect the environment? Does environmental quality have an impact on income inequality? How should environmental policies be designed to tackle both of these challenges?

A Simultaneous Equation Approach to Examining Linkages Between Income Inequality and Environmental Degradation in Lower Middle-Income Economies in ASEAN

“…This could be attributed to the implementation of strict environmental policies and the promotion of environmental awareness among lower middle class, providing alternative economic avenues. A trade-off exists between both variables [26,27]. Reducing poverty through income redistribution can increase carbon emissions and environmental degradation [28][29][30].…”