The Effects of Climate Change on Income Inequality: Evidence from APEC Member Economies

Wongi Kim ()
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Wongi Kim: Sungshin Women's University, Postal: [02844] Donam Sujung Campus: 2, 34 da-gil, Bomun-ro, Seongbuk-gu, Seoul, https://www.sungshin.ac.kr/sites/main_kor/main.jsp

No 21-2, APEC Study Series from Korea Institute for International Economic Policy

Abstract: This study empirically investigates the dynamic effects of climate change on within-country income inequality. Using panel data of 17 APEC member economies, I estimate impulse responses via the local projection method. Temperature and precipitation shocks, defined as deviations of temperature and precipitation from their historical norms, are also exploited to measure country-specific climate change. The empirical results reveal the following. First, temperature and precipitation shocks deteriorate income inequality measured by the Gini index; these effects are long-lasting. Moreover, asymmetric effects exist: heatwaves and droughts more significantly increase income inequality than coldwaves and floods. Lastly, current redistribution policies do not seem to effectively mitigate those adverse effects. I also discuss implications of carbon pricing/tax and environmental taxes related to income inequality.

Keywords: APEC; climate change; income inequality; redistribution policy (search for similar items in EconPapers)
Pages: 57 pages
Date: 2021-12-15
New Economics Papers: this item is included in nep-agr and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ris:kiepas:2021_002

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