Industrial transformation, ecological protection and common prosperity

Purpose Income inequality represents a common challenge in the economic development process of major global economies. However, existing research has insufficiently examined the logical relationship embedded within environmental constraints among industrial upgrading, high-quality development, and common prosperity. This paper aims to address this gap by investigating how environmental issues arising from non-agricultural industrial development influence income distribution, thereby exploring the inherent connections between industrial transformation and shared prosperity under environmental limitations. Design/methodology/approach Based on World Bank data, which corroborates the environmental problems associated with non-agricultural industrial development, this study employs theoretical analysis and empirical modeling to elucidate the mechanisms through which environmental factors contribute to the widening income gap. The research specifically examines the lagged impact of environmental pollution on human capital and incorporates this temporal dimension into both theoretical frameworks and econometric tests. Findings The study reveals that environmental pollution exerts a delayed effect on human capital, creating a “concealment effect” that obscures its full socio-economic impact. This phenomenon provides a theoretical and empirical explanation for the prevalent “pollute first, treat later” approach in industrial development. Furthermore, the process alters the demand structure of labor factors, enlarges the skill premium, and consequently worsens the distribution pattern of factor income, thereby exacerbating income inequality. Originality/value This paper innovatively integrates environmental constraints into the analysis of the “industrial upgrading high-quality development-common prosperity” nexus, highlighting the concealed and lagged influence of pollution on human capital and labor markets. It provides a new perspective on how environmental degradation indirectly aggravates income disparity through changes in factor demand and skill premium expansion. The findings underscore the necessity of considering the synergistic interaction among technological upgrading, industrial coordination, and green production in fostering sustainable and inclusive growth on the new journey toward comprehensively building a modern socialist country.