For Whom the Bell Tolls: Climate Change and Income Inequality

João Tovar Jalles Serhan Cevik

No 2023/0277, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: Climate change is the defining challenge of our time with complex and evolving dynamics. The effects of climate change on economic output and financial stability have received considerable attention, but there has been much less focus on the relationship between climate change and income inequality. In this paper, we provide new evidence on the association between climate change and income inequality, using a large panel of 158 countries during the period 1995 – 2019. We find that an increase in climate change vulnerability is positively associated with rising income inequality. More interestingly, splitting the sample into country groups reveals a considerable contrast in the impact of climate change on income inequality. While climate change vulnerability has no statistically significant effect on income distribution in advanced economies, the coefficient on climate change vulnerability is seven times greater and statistically highly significant in the case of developing countries due largely to weaker capacity for climate change adaptation and mitigation. These findings are robust with alternative estimation methods and measures of income inequality, but it should be noted that the appropriate measurement of climate change vulnerability and resilience remains a challenge that imposes limits on empirical analysis.

Keywords: Income inequality; climate change; vulnerability; resilience. (search for similar items in EconPapers)
JEL-codes: C30 D30 E60 O10 Q54 (search for similar items in EconPapers)
Date: 2023-06
New Economics Papers: this item is included in nep-agr, nep-env and nep-pke
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp02772023

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