CO2 EMISSIONS AND REGIONAL INCOME DISPARITY: EVIDENCE FROM CHINA

In this paper, we propose the hypothesis: Given the environmental Kuznets curve (EKC) hypothesis, regional income inequality has a negative, indirect impact on the average level of CO2 emissions through decreasing marginal emission propensities (MEP) of GDP. We have employed a vector error correction model and three inequality measures in our empirical analysis. The empirical results support the hypothesis in China. The main findings of this paper suggest that a trade-off exists between reducing CO2 emissions and narrowing regional income disparity and that the MEP contributes to this negative effect.