The Effectiveness of Redistribution in Carbon Inequality: What About the Top 1%

Abstract

This study investigates the impact of income redistribution on carbon emissions across 154 countries from 1995 to 2023, with a particular focus on carbon inequality. Using a dynamic panel approach with two-step System GMM estimations, the analysis considers three dependent variables: average per capita emissions, top 1% per capita emissions, and the ratio of top 1% per capita emissions to national average per capita emissions. Results show that income redistribution (measured in both absolute and relative terms) significantly reduces average per capita emissions in the short term. However, redistribution has no mitigating effect on the carbon emissions of the top 1%; in some models, it is even associated with increases in elite emissions and a widening of carbon inequality. These findings suggest that while redistribution may contribute to national emission reductions, it is insufficient to curb the carbon-intensive lifestyles of the wealthiest. The analysis confirms the Environmental Kuznets Curve (EKC) hypothesis and underscores the need for complementary policy tools to more effectively address the emissions of high-emitting individuals. Overall, this study contributes to the literature by linking income redistribution with emission disparities across income groups and highlights the importance of considering distributional dynamics in climate policy design.