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Impacts of Income Inequality on CO2 Emission under Different Climate Change Mitigation Policies

Jeong Hwan Bae
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Jeong Hwan Bae: Chonnam National University

Korean Economic Review, 2018, vol. 34, 187-211

Abstract: This study empirically examines whether income inequality affects CO2 emission under various climate change mitigation policies. The climate change mitigation policies include carbon tax, emission trading, renewable portfolio standard, feed-in tariff, and renewable fuel standard. The total marginal effect of inequality on CO2 emission is divided into direct, indirect, and interaction effects. Results show that high-income inequality directly raises CO2 emission while indirectly reducing it through its impact on economic growth. Inequality weakens the effectiveness of certain climate change mitigation policies through an interaction effect between inequality and climate change mitigation policies. Whether inequality increases CO2 emission or vice versa cannot be confirmed from the empirical outcomes of total marginal effects of inequality on CO2 emission under different climate change mitigation policies. However, the effectiveness of climate change mitigation policies may be diminished when high inequality exists in a country.

Keywords: Income Inequality; CO2 emission; Economic Growth; Climate Change Mitigation Policies (search for similar items in EconPapers)
JEL-codes: Q42 Q53 Q58 (search for similar items in EconPapers)
Date: 2018
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