Income inequality and CO₂ emissions in the G7, 1870–2014: evidence from non-parametric modelling

We examine whether income inequality effected carbon emissions in what are now the world's wealthiest countries over the period 1870–2014. Employing a non-parametric panel estimation method with cross-sectional and time-varying coefficients, we find that the relationship between income inequality and CO₂ emissions is highly non-linear. In terms of signs and significance, the nonparametric coefficient function for income inequality is found to vary over the period 1870–2014. Income inequality exhibits a significant positive effect from 1870 to 1880 and a significant negative impact from 1950 to 2000 on CO₂ emissions. We also find that for extended periods between 1881 and 1949 and between 2000 and 2014, there is no significant relationship between the two variables.