Is income inequality a driver for renewable energy consumption?

Abstract

Although many initiatives have been made to research the effect of income inequality on environmental issues, the question of whether income inequality affects renewable energy consumption hasn’t been answered. This gap in the literature raises an important question that needs to be answered by researchers: can the income inequality affect renewable energy consumption? As far as is known, the study is the first attempt to discover this relationship. Therefore, the impact of income inequality on renewable energy consumption is examined theoretically and empirically in 43 developed and developing countries for 2000–2015. In order to avoid the omitted variable problem; economic, environmental and institutional variables such as GDP per capita, corruption, CO2 emissions and trade openness are included in the model. The results demonstrate that the decline in income inequality will enhance renewable energy consumption. In other words, policymakers have the opportunity to reduce income inequality and environmental degradation at the same time. Similarly, corruption control and raise CO2 emissions will increase also renewable energy consumption. Otherwise, economic determinants such as economic growth and trade openness have no meaningful effect on renewable energy consumption.