The effect of income inequality on the relationship between economic growth and environmental pollution in Iran
Subject Areas : Environmental EconomicsFarzaneh Maleki 1 , Mahboobeh Farahati 2
1 - M. A. of Economic, Faculty of Economics, Management and Administrative Sciences, Semnan University, Semnan, Iran.
2 - Assistant Professor of Economics, Faculty of Economics, Management and Administrative Sciences, Semnan University, Semnan, Iran. *(Corresponding Author)
Keywords: Economic growth, environmental pollution, Income inequality, Iran.,
Abstract :
Background and Objective: The main purpose of this paper is to investigate the effect of income inequality on the relationship between economic growth and environmental pollution in Iran. In this regard, real GDP per capita, carbon dioxide (CO2) emissions per capita, and Gini coefficient are used as indicators of economic growth, environmental pollution, and income inequality, respectively.
Material and Methodology: To this end, an empirical model is estimated using the autoregressive distributed lag (ARDL) approach and data for the period 1363-1399.
Findings: The results of the cointegration analysis based on the autoregressive distributed lag (ARDL) approach show that in the long-run, as income per capita increases, CO2 emissions per capita first decrease and then start increasing after a certain income threshold is reached. Also, according to the findings, With the increase of income inequality, environmental pollution reaches its minimum value at a lower level of per capita income. In addition, the results reveal that the impact of income inequality on environmental pollution depends on the level of per capita income and the long-run effect of the control variables of per capita consumption of fossil fuels and the share of added value of the industry and mining sector on environmental pollution is positive and statistically significant.
Discussion and Conclusion: This result implies that the environmental Kuznets curve (EKC) hypothesis of an inverted U-shaped relationship between economic growth and environmental pollution does not hold for Iran. also, an increase in income inequality causes a leftward shift of the U-shaped curve describing the relationship between economic growth and environmental pollution. The most important political implication of this study is that, parallel to the growth policies, a more equal distribution of income can help reduce environmental pollution.
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