How Does Income Inequality Influence Environmental Regulation in the Context of Corruption? A Panel Threshold Analysis Based on Chinese Provincial Data.

Abstract

The question of how the income inequality of residents affects the level of environmental regulation in the context of official corruption was the core research issue of this study. We analyzed this problem using the panel threshold regression model from 26 provinces in China from 1995 to 2017. We found that when there is no official corruption, the widening of the residents’ income inequality promotes stricter environmental regulations; when the corruption problem is serious, the expansion of the residents’ income inequality leads to the decline in environmental standards; that is, the impact of residents’ income inequality on environmental regulation has a threshold effect due to corruption. In addition, the threshold effect due to corruption of all residents’ income inequality on environmental regulation is mainly generated by the urban residents’ income inequality and the urban–rural income inequality. This paper contributes to the literature that concentrates on the relationship between income inequality and environmental regulation, and shows that corruption is a key factor that can deeply influence that relationship. The research conclusion shows that increasing anti-corruption efforts can not only maintain national political stability, social fairness, and justice, but also be a powerful measure for environmental pollution governance.