Turner College Economist Investigates Income Inequality-Carbon Emissions Relationship Across Europe

Global trends in carbon emissions have made environmental degradation a top priority in achieving sustainable development goals for European (and other) countries. Over the past decade or so, a number of studies have addressed the income inequality-carbon emissions relationship. Several of these have found either a positive or negative relationship, while others have reported mixed results regarding this nexus. Still other studies have failed to produce a significant relationship between income inequality and environmental quality. Understanding the relationship between income inequality and environment quality is crucial to the design of policies that aim to promote sustainable development. In relation to that end, a new study by Turner College economist Frank Mixon, Ján Buleca, Maryna Tatar and Nikola Šubová of the Technical University of Košice, and Ermanno Affuso of the University of South Alabama empirically assesses the relationship between income inequality and carbon emissions levels across 38 European countries.

In order to examine the income inequality-carbon emissions nexus across the countries of Europe, the study performs a cluster analysis, which is a technique used in machine learning that makes it possible to organize objects into relatively homogeneous groups, and panel data regression, which allows for consideration of individual effects specific to each country. The empirical analysis identified three clusters, the first of which includes the highest income countries, based on a mean per capita income of $60,000, and the third of which includes the lowest income countries, based on a mean per capita income of $16,000. Next, the authors determined the representative countries of each of the clusters – more specifically, the countries that carry the most significant information specific to the cluster – on the basis of the Euclidean distance of each country to other countries in the cluster. For the first cluster, these are the United Kingdom, France and Germany, and for the third cluster they are Turkey and Russia. Poland stands alone as the representative country for the second cluster.

Lastly, Mixon et al. determine the interdependence between the level of emissions and the indicators of countries' economic development and income inequality, differentiated for each cluster, on the basis of a panel data model. The results suggest that the level of carbon emissions per capita among first cluster countries is influenced negatively by income inequality, life expectancy at birth, and access to education. The level of emissions per capita of the third cluster countries is influenced positively by GDP per capita, income inequality, and access to education, and negatively by research and development expenditures. Finally, the level of carbon emissions per capita of the second cluster countries is negatively by GDP per capita, life expectancy at birth, and research and development expenditures.