The Middle-class Collapse and the Environment

The thesis that unequal societies are harmful to the planet was defended by Boyce (1994) in a framework based on the unequal bargaining power between rich and poor. Our study reinvestigates this theory by removing any reference to power in order to study the conditions under which it can still occur. We show that a middle-class collapse can aggravate or alleviate the burden on the planet, depending on income disparities and weight of upward vs. downward mobility. Moreover, the paper shows how an appropriate Environmental policy can increase the political acceptability of a Social one designed for mitigating the deleterious effects of a middle-class collapse through the reduction of (ex-post) income disparities.