Can Reducing Income Inequality Decouple Economic Growth from CO₂ Emissions?

In the past two decades, income inequality has steadily increased in most developed nations. During this same period, the growth rate of CO 2 emissions has declined in many developed nations, cumulating to a recent period of decoupling between economic growth and CO 2 emissions. The aim of the present study is to advance research on socioeconomic drivers of CO 2 emissions by assessing how the distribution of income affects the relationship between economic growth and CO 2 emissions. The authors find that from 1985 to 2011, rising income inequality leads to a tighter coupling between economic growth and CO 2 emissions in developed nations. Additionally, the authors find that increases in the top 20 percent of income earners’ share of national income have resulted in a larger association between economic growth and CO 2 emissions, while increases in the bottom 20 percent of income earners’ share of national income reduced the association between economic growth and CO 2 emissions.