Unveiling the impact of income inequality on 〖Co〗_2 emissions in sub-Saharan Africa countries (SSA)
Keywords:
Income inequality; CO2 emissions; sub-Saharan African Countries; panel ARDLAbstract
Carbon dioxide emissions and income disparity have become crucial unclear challenges threatening the environment and humanity over the past three decades. Erstwhile environment studies have claimed that greater energy use contributes to poor environmental quality but ignored the significance of financial development in mediating with income inequality on carbon dioxide or environmental quality. Our study employed both panel autoregressive distributed lag model (ARDL) and causality tests to investigate whether income inequality impacts emissions and how the interaction between income inequality and financial development impacts emissions in sub-Saharan Africa (SSA) countries from 2004–2019. The findings revealed that financial development and all other control variables except trade/GDP ratio positively impact carbon emission in SSA in the long run. The result shows that the trade/GDP ratio is contrariwise related to carbon emission in SSA. In the short run, all the control variables, income inequality, population density, financial development trade to GDP, energy consumption, per capita income and urbanization, are not statistically significant. In contrast, per capita income, population density and urbanization have an inverse relationship with carbon emission in SSA. The analysis of the interaction between income inequality and financial development on carbon emission revealed that financial development plays a significant role as a moderator in increasing carbon emission coming from income inequality. The study concludes that financial development plays a significant role as a moderator in increasing carbon emissions coming from income inequality. As such, the governments of these SSA nations and other stakeholders should work to combine economic disparity and financial instability to prevent harm to the environment by cutting carbon emissions.
References
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Boyce, J. K. (1994). Inequality as a cause of environmental degradation. Ecol. Econ., 11, 169–178, doi:10.1016/0921-8009(94)90198-8.
Chen, J., Wang, P., Cui, L., Huang, S. & Song, M. (2018). Decomposition and decoupling analysis of CO2 emissions in OECD. Appl. Energy 231, 937–950. https://doi.org/ 10.1016/j.apenergy.2018.09.179.
Chen, J., Xian, Q., Zhou, J. & Li, D. (2020). Impact of income inequality on CO2 emissions in G20 countries. Journal of Environmental Management, 271110987
Drabo, A. (2011). Impact of income inequality on health: does environment quality matter? Environ Plan A 43 (1), 146–165.
Golley, J. & Meng, X. (2012). Income inequality and carbon dioxide emissions: the case of Chinese urban households. Energy Econ. 34 (6), 1864–1872.
Guo, L. (2014). CO2 Emissions and regional income disparity: evidence from China. Singapore Econ. Rev. 59, 1450007. https://doi.org/10.1142/S0217590814500076.
Grossman, G. M. & Krueger, A. B. (1995). Economic growth and the environment. Q. J. Econ. 110, 353–377. https://doi.org/10.2307/2118443.
Grunewald, N., Klasen, S., Martínez-Zarzoso, I. & Muris, C. (2017). The trade-off between income inequality and carbon dioxide emissions. Ecol. Econ., 142, 249–256, doi:10.1016/j.ecolecon.2017.06.034.
Hailemariam, A., Dzhumashev, R. & Shahbaz, M. (2019). Carbon emissions, income inequality and economic development. Empir. Econ. https://doi.org/10.1007/ s00181-019-01664-x.
Hao, Y., Chen, H. & Zhang, Q. (2016). Will income inequality affect environmental quality? Analysis based on China’s provincial panel data. Ecol. Indicat. 67, 533–542. https:// doi.org/10.1016/j.ecolind.2016.03.025.
Heerink, N.; Mulatu, A. & Bulte, E. H. (2001). Income inequality and the environment: Aggregation bias in environmental Kuznets curves. Ecol. Econ., 38, 359–367, doi:10.1016/s09218009(01)00171-9.
Hossain, M. S. (2011). Panel estimation for CO2 emissions, energy consumption, economic growth, trade openness and urbanization of newly industrialized countries. Energy Policy, 39(11), 6991-6999.
Huang, Z. & Duan, H. (2020). Estimating the threshold interactions between income inequality and carbon emissions. Journal of Environment Management, Vol. 263, 110393. https://doi.org/ 10.1016/j.jenvman.2020.110393.
Hübler, M. (2017). The inequality-emissions nexus in the context of trade and development: a quantile regression approach. Ecol. Econ. 134, 174–185. https://doi. org/10.1016/j.ecolecon.2016.12.015.
Jorgenson, A., Schor, J., Huang, X. & Fitzgerald, J. (2015). Income inequality and residential carbon emissions in the United States: a preliminary analysis. Hum. Ecol. Rev. 22, 93–105. https://doi.org/10.22459/HER.22.01.2015.06.
Jorgenson, A. K., Schor, J. & Huang, X. (2017). Income inequality and carbon emissions in the United States: A state-level analysis, 1997–2012. Ecol. Econ., 134, 40–48, doi:10.1016/j.ecolecon.2016.12.016.
Kasuga, H. & Takaya, M. (2017). Does inequality affect environmental quality? Evidence from major Japanese cities. J. Clean. Prod., 142, 3689–3701, doi:10.1016/j.jclepro.2016.10.099.
Knight, K. W., Schor, J. B. & Jorgenson, A. K. (2017). Wealth inequality and carbon emissions in high-income countries. Soc.
Curr., 4, 403–412, doi:10.1177/2329496517704872.
Koenker, R. & Bassett, G. (1978). Regression quantiles. Econometrica 46, 33–50. https:// doi.org/10.2307/1913643.
Krueger, A. B. & Grossman, G. M. (1995). Economic growth and the environment. Q. J. Econ., 110, 353–377.
Lin, B. & Xu, B. (2018). Factors affecting CO2 emissions in China’s agriculture sector: a quantile regression. Renew. Sustain. Energy Rev. 94, 15–27. https://doi.org/ 10.1016/j.rser.2018.05.065.
Li, C., Zuo, J., Wang, Z. & Zhang, X. (2020). Production- and consumption-based convergence analyses of global CO2 emissions. J. Clean. Prod. 264, 121723. https:// doi.org/10.1016/j.jclepro.2020.121723.
Liu, Q., Wang, S. Zhang, W., Li, J. & Kong, Y. (2019). Examining the effects of income inequality on CO2 emissions: Evidence from non-spatial and spatial perspectives. Appl. Energy, 236, 163–171, doi:10.1016/j.apenergy.2018.11.082.
Mathonnat C. and Williams B. (2020). Does more finance mean more inequality in times of crisis? Economic Systems (2020), doi: https://doi.org/10.1016/j.ecosys.2020.100818
Muhammad, B. (2019). Energy consumption, CO2 emissions and economic growth in developed, emerging and the Middle East and North Africa countries. Energy, 179, 232–245, doi:10.1016/j.energy.2019.03.126.
Muhammad, S., Long, X., Salman, M. & Dauda, L. (2020). Effect of urbanization and international trade on CO2 emissions across 65 belt and road initiative countries. Energy 196, 117102. https://doi.org/10.1016/j.energy.2020.117102.
Ogede, J. S. (2020). Deconstructing the impact of Entrepreneurship on Income Inequality in sub-Saharan Africa Countries (SSA). Economics and Business, Vol. 34, 273–284. oi.org/10.2478/eb-2020-0018
Ridzuan, A. R., Ismail, N. A., Hamat, A., Md Nor, A. S. and Ahmed, E. M. (2017). Does Equitable Income Distribution Influence Environmental Quality? Evidence from Developing Countries of ASEAN-4. Pertanika J. Soc. Sci. & Hum. 25 (1), pg.385 – 400.
Rafiq, S., Salim, R., & Nielsen, I. (2016). Urbanization, openness, emissions and energy intensity: A study of increasingly urbanized emerging economies. Energy Economics, 56, 20–28.
Ravallion, M.; Heil, M.; Jalan, J. (2000). Carbon emissions and income inequality. Oxf. Econ. Pap., 52, 651–669, doi:10.1093/oep/52.4.651.
Ridzuan, S. (2019). Inequality and the environmental Kuznets curve. J. Clean. Prod. 228, 1472–1481. https://doi.org/10.1016/j.jclepro.2019.04.284.
Sharma, S.S. (2011). Determinants of carbon dioxide emissions: empirical evidence from 69 countries. Appl. Energy 88, 376–382.
Solarin, S. A. & Lean, H. H. (2016). Natural gas consumption, income, urbanization, and CO2 emissions in China and India. Environ. Sci. Pollut. Res. 23, 18753–18765. https:// doi.org/10.1007/s11356-016-7063-9.
Uddin, M. M., Mishra, V. & Smyth, R. (2020). Income inequality and CO2 emissions in the G7, 1870–2014: Evidence from non-parametric modelling. Energy Economics, 88 (2020) 104780. doi.org/10.1016/j.eneco.2020.104780
Vona, F. & Patriarca, F. (2011). Income inequality and the development of environmental technologies. Ecol. Econ. 70, 2201–2213. https://doi.org/10.1016/j. ecolecon.2011.06.027.
Wolde-Rufael, Y. & Idowu, S. (2017). Income distribution and CO2 emission: A comparative analysis for China and India. Renew. Sustain. Energy Rev., 74, 1336–1345, doi:10.1016/j.rser.2016.11.149.
Yang, B., Ali, M., Nazir, M. R., Ullah, W. & Qayyum, M. (2020). Financial instability and CO2 emissions: Cross country evidence. Air Qual. Atmos. Health, 13, 1–10. doi:10.1007/s11869-020-00809-7.
Yang, B.; Ali, M.; Hashmi, S. H., & Shabir, M. (2020). Income Inequality and CO2 Emissions in Developing Countries: The Moderating Role of Financial Instability. Sustainability, Vol, 12, 6810. doi:10.3390/su12176810
Zhang, C. & Zhao, W. (2014). Panel estimation for income inequality and CO2 emissions: A regional analysis in China. Appl. Energy, 136, 382–392, doi:10.1016/j.apenergy.2014.09.048.
Argyriou, M. (2019). There’s no Reason Countries can’t Still Prosper without Increasing Emissions. pp. 1–5. Available online: https://theconversation.com/developing-countries-can-prosper-withoutincreasing-emissions-84044.
Asongu, S. & Vo, X. (2020). The Effect of Finance on Inequality in Sub-Saharan Africa: Avoidable CO2 emissions Thresholds. African Governance and Development Institute WP/20/030
Bai, C., Feng, C., Yan, H., Yi, X., Chen, Z. & Wei, W. (2020). Will income inequality influence the abatement effect of renewable energy technological innovation on carbon dioxide emissions? Journal of Environment Management, 264, 110482. https://doi.org/ 10.1016/j.jenvman.2020.110482.
Barra, C. & Zotti, R. (2017). Investigating the non-linearity between national income and environmental pollution: International evidence of Kuznets curve. Environ. Econ. Policy Stud., 20, 179–210, doi:10.1007/s10018-017-0189-2.
Baek, J. & Gweisah, G. (2013). Does income inequality harm the environment? Empirical evidence from the United States. Energy Policy, 62, 1434–1437, doi:10.1016/j.enpol.2013.07.097.
Borghesi, S. (2006). Income Inequality and the Environmental Kuznets Curve. Environment, Inequality and Collective Action, Routledge, Taylor & Francis Group, USA.
Boyce, J. K. (1994). Inequality as a cause of environmental degradation. Ecol. Econ., 11, 169–178, doi:10.1016/0921-8009(94)90198-8.
Chen, J., Wang, P., Cui, L., Huang, S. & Song, M. (2018). Decomposition and decoupling analysis of CO2 emissions in OECD. Appl. Energy 231, 937–950. https://doi.org/ 10.1016/j.apenergy.2018.09.179.
Chen, J., Xian, Q., Zhou, J. & Li, D. (2020). Impact of income inequality on CO2 emissions in G20 countries. Journal of Environmental Management, 271110987
Drabo, A. (2011). Impact of income inequality on health: does environment quality matter? Environ Plan A 43 (1), 146–165.
Golley, J. & Meng, X. (2012). Income inequality and carbon dioxide emissions: the case of Chinese urban households. Energy Econ. 34 (6), 1864–1872.
Guo, L. (2014). CO2 Emissions and regional income disparity: evidence from China. Singapore Econ. Rev. 59, 1450007. https://doi.org/10.1142/S0217590814500076.
Grossman, G. M. & Krueger, A. B. (1995). Economic growth and the environment. Q. J. Econ. 110, 353–377. https://doi.org/10.2307/2118443.
Grunewald, N., Klasen, S., Martínez-Zarzoso, I. & Muris, C. (2017). The trade-off between income inequality and carbon dioxide emissions. Ecol. Econ., 142, 249–256, doi:10.1016/j.ecolecon.2017.06.034.
Hailemariam, A., Dzhumashev, R. & Shahbaz, M. (2019). Carbon emissions, income inequality and economic development. Empir. Econ. https://doi.org/10.1007/ s00181-019-01664-x.
Hao, Y., Chen, H. & Zhang, Q. (2016). Will income inequality affect environmental quality? Analysis based on China’s provincial panel data. Ecol. Indicat. 67, 533–542. https:// doi.org/10.1016/j.ecolind.2016.03.025.
Heerink, N.; Mulatu, A. & Bulte, E. H. (2001). Income inequality and the environment: Aggregation bias in environmental Kuznets curves. Ecol. Econ., 38, 359–367, doi:10.1016/s09218009(01)00171-9.
Hossain, M. S. (2011). Panel estimation for CO2 emissions, energy consumption, economic growth, trade openness and urbanization of newly industrialized countries. Energy Policy, 39(11), 6991-6999.
Huang, Z. & Duan, H. (2020). Estimating the threshold interactions between income inequality and carbon emissions. Journal of Environment Management, Vol. 263, 110393. https://doi.org/ 10.1016/j.jenvman.2020.110393.
Hübler, M. (2017). The inequality-emissions nexus in the context of trade and development: a quantile regression approach. Ecol. Econ. 134, 174–185. https://doi. org/10.1016/j.ecolecon.2016.12.015.
Jorgenson, A., Schor, J., Huang, X. & Fitzgerald, J. (2015). Income inequality and residential carbon emissions in the United States: a preliminary analysis. Hum. Ecol. Rev. 22, 93–105. https://doi.org/10.22459/HER.22.01.2015.06.
Jorgenson, A. K., Schor, J. & Huang, X. (2017). Income inequality and carbon emissions in the United States: A state-level analysis, 1997–2012. Ecol. Econ., 134, 40–48, doi:10.1016/j.ecolecon.2016.12.016.
Kasuga, H. & Takaya, M. (2017). Does inequality affect environmental quality? Evidence from major Japanese cities. J. Clean. Prod., 142, 3689–3701, doi:10.1016/j.jclepro.2016.10.099.
Knight, K. W., Schor, J. B. & Jorgenson, A. K. (2017). Wealth inequality and carbon emissions in high-income countries. Soc.
Curr., 4, 403–412, doi:10.1177/2329496517704872.
Koenker, R. & Bassett, G. (1978). Regression quantiles. Econometrica 46, 33–50. https:// doi.org/10.2307/1913643.
Krueger, A. B. & Grossman, G. M. (1995). Economic growth and the environment. Q. J. Econ., 110, 353–377.
Lin, B. & Xu, B. (2018). Factors affecting CO2 emissions in China’s agriculture sector: a quantile regression. Renew. Sustain. Energy Rev. 94, 15–27. https://doi.org/ 10.1016/j.rser.2018.05.065.
Li, C., Zuo, J., Wang, Z. & Zhang, X. (2020). Production- and consumption-based convergence analyses of global CO2 emissions. J. Clean. Prod. 264, 121723. https:// doi.org/10.1016/j.jclepro.2020.121723.
Liu, Q., Wang, S. Zhang, W., Li, J. & Kong, Y. (2019). Examining the effects of income inequality on CO2 emissions: Evidence from non-spatial and spatial perspectives. Appl. Energy, 236, 163–171, doi:10.1016/j.apenergy.2018.11.082.
Mathonnat C. and Williams B. (2020). Does more finance mean more inequality in times of crisis? Economic Systems (2020), doi: https://doi.org/10.1016/j.ecosys.2020.100818
Muhammad, B. (2019). Energy consumption, CO2 emissions and economic growth in developed, emerging and the Middle East and North Africa countries. Energy, 179, 232–245, doi:10.1016/j.energy.2019.03.126.
Muhammad, S., Long, X., Salman, M. & Dauda, L. (2020). Effect of urbanization and international trade on CO2 emissions across 65 belt and road initiative countries. Energy 196, 117102. https://doi.org/10.1016/j.energy.2020.117102.
Ogede, J. S. (2020). Deconstructing the impact of Entrepreneurship on Income Inequality in sub-Saharan Africa Countries (SSA). Economics and Business, Vol. 34, 273–284. oi.org/10.2478/eb-2020-0018
Ridzuan, A. R., Ismail, N. A., Hamat, A., Md Nor, A. S. and Ahmed, E. M. (2017). Does Equitable Income Distribution Influence Environmental Quality? Evidence from Developing Countries of ASEAN-4. Pertanika J. Soc. Sci. & Hum. 25 (1), pg.385 – 400.
Rafiq, S., Salim, R., & Nielsen, I. (2016). Urbanization, openness, emissions and energy intensity: A study of increasingly urbanized emerging economies. Energy Economics, 56, 20–28.
Ravallion, M.; Heil, M.; Jalan, J. (2000). Carbon emissions and income inequality. Oxf. Econ. Pap., 52, 651–669, doi:10.1093/oep/52.4.651.
Ridzuan, S. (2019). Inequality and the environmental Kuznets curve. J. Clean. Prod. 228, 1472–1481. https://doi.org/10.1016/j.jclepro.2019.04.284.
Sharma, S.S. (2011). Determinants of carbon dioxide emissions: empirical evidence from 69 countries. Appl. Energy 88, 376–382.
Solarin, S. A. & Lean, H. H. (2016). Natural gas consumption, income, urbanization, and CO2 emissions in China and India. Environ. Sci. Pollut. Res. 23, 18753–18765. https:// doi.org/10.1007/s11356-016-7063-9.
Uddin, M. M., Mishra, V. & Smyth, R. (2020). Income inequality and CO2 emissions in the G7, 1870–2014: Evidence from non-parametric modelling. Energy Economics, 88 (2020) 104780. doi.org/10.1016/j.eneco.2020.104780
Vona, F. & Patriarca, F. (2011). Income inequality and the development of environmental technologies. Ecol. Econ. 70, 2201–2213. https://doi.org/10.1016/j. ecolecon.2011.06.027.
Wolde-Rufael, Y. & Idowu, S. (2017). Income distribution and CO2 emission: A comparative analysis for China and India. Renew. Sustain. Energy Rev., 74, 1336–1345, doi:10.1016/j.rser.2016.11.149.
Yang, B., Ali, M., Nazir, M. R., Ullah, W. & Qayyum, M. (2020). Financial instability and CO2 emissions: Cross country evidence. Air Qual. Atmos. Health, 13, 1–10. doi:10.1007/s11869-020-00809-7.
Yang, B.; Ali, M.; Hashmi, S. H., & Shabir, M. (2020). Income Inequality and CO2 Emissions in Developing Countries: The Moderating Role of Financial Instability. Sustainability, Vol, 12, 6810. doi:10.3390/su12176810
Zhang, C. & Zhao, W. (2014). Panel estimation for income inequality and CO2 emissions: A regional analysis in China. Appl. Energy, 136, 382–392, doi:10.1016/j.apenergy.2014.09.048.
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2022-03-04
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OGEDE, J., & TIAMIYU, H. O. (2022). Unveiling the impact of income inequality on 〖Co〗_2 emissions in sub-Saharan Africa countries (SSA): Array. EuroEconomica, 41(1). Retrieved from https://dj.univ-danubius.ro/index.php/EE/article/view/1477
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