Income inequality, natural resources dependence and renewable energy

High reliance on non-renewable energy sources is a commonly-cited driver of increased income inequality. This study hypothesizes renewable energy can alleviate this issue due to its ability to replace non-renewable energy. This paper uses panel data of 10 rich natural resources countries in Asia for a sample period of 1996–2020. The Dynamic Common Correlated Effects model is employed. This study discovers natural resources dependence causes income inequality to widen. Furthermore, renewable energy significantly moderates the unfavourable impacts of natural resource dependence on income inequality. This study recommends the establishment of more captive renewable energy power plants in India, Pakistan, Malaysia, Mongolia, and Vietnam. This study also proposes the creation of Sovereign Wealth Funds which are dedicated to establishing renewable energy ecosystems in Bangladesh, China, Indonesia, and Thailand. • We examine the relationship between income inequality, natural resources dependence and renewable energy in Asia. • We hypothesize that the negative effect of non-renewable energy on income inequality will be mitigated by renewable energy. • The symptoms of natural resources curse are existent in Asia. • Renewable energy has a weakening indirect impact on the natural resources dependence – income inequality nexus in Asia. • Some countries have a tendency that the renewable energy will widen income inequality.