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Pré-publication, Document de travail

The impact of income inequality on public environmental expenditure with green consumerism

Abstract : This article analyzes the impact of income inequality on environmental policy in the presence of green consumers. We fi rst develop a model with two main ingredients: citizens, with di erent income capacities have access to two commodities whose consumption differs in terms of price and environmental impact, and they vote on the environmental policy. In this setting, there exists a unique political equilibrium in which the population is split into two groups, that differ in the type of good, conventional vs. green, they consume. The analysis shows that a change in the level of inequality induces variations in both the size and composition of these two groups of citizens. This in turn determines whether or not more inequality stimulates the public policy. We then conduct an empirical investigation on a panel of European countries over the period 1996-2019. We fi nd the existence of an inverted J-shape relationship between inequality and public environmental spending. This outcome can be explained by the combination of a composition effect, affecting the green group, and a substitution effect between private green consumption and public environmental spending.
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Pré-publication, Document de travail
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Contributeur : Laurent Garnier <>
Soumis le : mardi 1 juin 2021 - 13:59:14
Dernière modification le : jeudi 3 juin 2021 - 03:24:32


WP 2021-03_V3.pdf
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Distributed under a Creative Commons Paternité - Pas d'utilisation commerciale - Pas de modification 4.0 International License


  • HAL Id : hal-03146526, version 3


Lesly Cassin, Paolo Melindi-Ghidi, Fabien Prieur. The impact of income inequality on public environmental expenditure with green consumerism. 2021. ⟨hal-03146526v3⟩



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