Modelling the dual impact of technological innovations and renewable energy investment on environmental quality and income inequality: A time-varying non-parametric evidence

The growing concerns over environmental degradation and increased income inequality have intensified the need to understand the role of technological innovation and investment in renewable energy. This study examines the combined effects of technological innovation and renewable energy investment on environmental quality and income inequality in China. Additionally, this study uses annual data ranging from 1990 to 2022, converted into a monthly series, to examine the dynamic relationships using time-varying non-parametric wavelet analysis. Specifically, this study uses continuous and discrete wavelet transforms. This study includes important variables such as research and development, patent applications, digital technologies, renewable energy investment, urbanization, and economic growth. The results show that technological innovation has a significant effect on income inequality and environmental quality, especially in the short term. Similarly, renewable energy investment helps to reduce income inequality and improve environmental quality. However, these effects vary over time and across different frequencies. The results offer some support to the Environmental Kuznets Curve (EKC) Hypothesis, which suggests that technological innovation helps to improve environmental quality as income levels increase. In addition, urbanization and economic growth are important but complex determinants of both environmental and income inequality outcomes.