Income inequality and CO2 emissions in France: Does income inequality indicator matter?

This paper studies the link between carbon dioxide (CO2) emissions and income inequality in France over 1980-2018, focusing on the choice of income inequality indicators in use. To do so, we use a new source of data on net (post-tax and transfer) income inequality indicators using net Gini and Atkinson indexes. We also use market (pre-tax and transfer) income inequality indicators utilizing the market Gini index and share of market income earned by the richest 10% of the population. Using the autoregressive distributed lag (ARDL) model, we find that income inequality has a different impact on CO2 emissions, depending on the income definition used for estimated disparities. Furthermore, the ARDL test shows that the market inequality coefficients are non-significant. However, net inequality indicators reduce CO2 emissions, and these results are consistent with the marginal propensity to emit theories, where some inequality could remain necessary to environmental quality.