Income inequality and carbon dioxide emissions: The case of Chinese urban households

Abstract

This paper draws on Chinese survey data to investigate variations in carbon dioxide emissions across households with different income levels. Rich households generate more emissions per capita than poor households via both their direct energy consumption and their higher expenditure on goods and services that use energy as an intermediate input. An econometric analysis confirms a positive relationship between emissions and income and establishes a slightly increasing marginal propensity to emit (MPE) over the relevant income range. The redistribution of income from rich to poor households is therefore shown to reduce aggregate household emissions, suggesting that the twin pursuits of reducing inequality and emissions can be achieved in tandem.