Impact of income inequality on environmental quality: the role of urbanisation and government behaviour

Siyuan Liu, Saifuzzaman Ibrahim and Lee Chin

International Journal of Sustainable Economy, 2026, vol. 18, issue 3, 299-322

Abstract: The aim of this study is to examine the impact of income inequality on environmental quality. Furthermore, the study focuses on the moderating influence of urbanisation and government behaviour in this relationship. The study collects data from 142 countries between 2010 and 2019 and then experimentally analyses it using the generalised method of moments (GMM). The findings provide three significant insights. First, exacerbating income inequality will lead to a decline in environmental quality. Second, there is a significant moderating effect of both urbanisation and government behaviour. Additionally, the results of the heterogeneity analysis show that only in high-income countries does income inequality significantly decrease environmental quality. Based on these findings, the government should consider the issue of income inequality when formulating environmental protection policies. Specifically, the government can promote income equity through tax policies and redistribution systems, thereby effectively improving environmental quality. In addition, the government should strengthen the planning and management of the urbanisation process and mitigate the negative impact of income inequality on environmental quality through reasonable government behaviours.

Keywords: income inequality; environmental quality; government behaviour; urbanisation; moderating effect; generalised method of moments; GMM; cross-national panel data. (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijsuse:v:18:y:2026:i:3:p:299-322

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