Effect of Income Distribution on Environmental Pollution Growth

Abstract

This research investigates the relationship between income distribution (measured by the Gini coefficient) and environmental pollution, specifically CO2 emissions, in a panel of developing countries (2010-2022). The study acknowledges that economic growth, often leading to increased resource consumption and pollution, necessitates sustainable development planning. It reviews existing theories like the Environmental Kuznets Curve (EKC), which posits that pollution initially rises with income before falling due to structural and technological shifts. Employing panel data analysis, the researchers utilized fixed-effects models after rejecting the pooled and random-effects specifications via Chow and Hausman tests. The key finding is a statistically significant negative relationship between the Gini coefficient and environmental pollutants, meaning that reduced income inequality is associated with increased pollution. Conversely, a positive and significant relationship exists between per capita income and pollution, indicating that as these developing nations increase production and income, pollution levels rise. The conclusion suggests that for these developing economies, efforts to increase per capita income and reduce inequality (lower Gini) currently result in greater environmental degradation, likely due to production methods heavily reliant on polluting, energy-intensive industries. Policymakers are advised to focus on strategies that decouple income growth from pollution, such as moving beyond raw material processing toward higher-value, cleaner industries