Journal of Economic Literature
ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)
The Economics of Inequality and the Environment
Journal of Economic Literature
(pp. 840–74)
Abstract
Environmental degradation and economic inequality are two of the defining challenges of the twenty-first century. We synthesize conceptual mechanisms that underpin inequality鈥揺nvironment linkages and take stock of the relevant empirical evidence. We propose three channels of interaction. We first describe how environmental benefits vary with household income. Second, we discuss how the cost of environmental policy is distributed across households. Third, we consider how income inequality and redistribution shape environmental outcomes. The three channels determine how both environmental quality and economic inequality matter for policy appraisal. We argue that it is crucial to consider inequality-environment linkages in economic research and policy design, as neither issue can be fully understood in isolation. We close by highlighting future research needs.Citation
Drupp, Moritz A., Ulrike Kornek, Jasper N. Meya, and Lutz Sager. 2025. "The Economics of Inequality and the Environment." Journal of Economic Literature 63 (3): 840–74. DOI: 10.1257/jel.20241696Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- Q54 Climate; Natural Disasters and Their Management; Global Warming
- Q56 Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- Q58 Environmental Economics: Government Policy