Panel estimation for income inequality and CO2 emissions: A regional analysis in China

With rapid economic growth, China is facing tremendous pressures of emission-reduction and serious income inequality issues. The existing research is concerned with the relationships between income inequality and CO2 emissions in recent years, but little attention has been paid to the regional differences in China. This paper investigated the impact of income and its inequality on CO2 emissions at the national and regional levels using the panel data from 1995 to 2010 in China. The empirical results show that income growth increases China's CO2 emissions. The effects of income growth on CO2 emissions vary across regions. Further, the impact of income inequality on CO2 emissions in the Eastern region is greater than that in the Western region. This research reveals that a more equitable income distribution may help control CO2 emissions in developing China, and there is a win-win situation of income redistribution and emission-reduction. Our findings merit particular attention from policy makers in China.