The distributional effects of climate change. An empirical analysis

Haroon Mumtaz and Angeliki Theophilopoulou

European Economic Review, 2024, vol. 169, issue C

Abstract: The role of climate change on output has been studied extensively in the empirical literature. However, its distributional implications have received little attention. This paper attempts to fill this gap by investigating if climate shocks affect income inequality. Using a Vector Autoregression for a large cross-country panel, we identify the climate shock in the frequency domain as the shock that explains the bulk of the variance of climate variables in the long-run. An adverse climate shock is associated with an increase in measures of income inequality, affecting mostly low income households. The impact of the shock is larger in magnitude for low income, hot countries with a significant agricultural sector and low degree of adaptation to climate change.

Keywords: Climate shock; Income inequality; Economic growth; Frequency domain identification; Panel VAR (search for similar items in EconPapers)
JEL-codes: C32 E32 Q54 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:169:y:2024:i:c:s0014292124001570

DOI: 10.1016/j.euroecorev.2024.104828

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