Economic inequality and the environment

This paper analyzes the relationship between the level of income inequality and the quality of the environment (as measured by sulfur dioxide air pollution levels) in the US for the years 1947–1996, using a vector error correction model. We find that air pollution levels do appear to be negatively significantly correlated with the level of income inequality (as measured by the Gini coefficient), that is, income inequality decreases as pollution increases. Furthermore, the quality of the environment appears to affect different portions of the observed income graduation differently. For the lowest two quintiles, higher pollution is associated with an increase in their share of total US income, while for the highest quintile, higher pollution is associated with a decrease in their share of total US income.