On income inequality and CO2 emissions in Bangladesh

Abstract

The United Nations called for a holistic approach to successfully achieve the sustainable development goals. In this study, we examine the association between two of those sustainable development goals, namely income inequality and emissions. More specifically, we analyze if income inequality is dynamically related to per capita CO₂ emissions in Bangladesh. We apply the autoregressive distributed lags technique while accounting for other important factors including national income, price, and urbanization. The dataset used in this study covers the period from 1980 to 2021. The results suggest long run cointegrations, running from income inequality to CO₂ emissions. Importantly, a one percent increase in the income share of the top 1% tends to increase per capita CO₂ emissions by 0.52%. These findings are consistent with the political economy theory and the Veblen effect hyopthesis. We provide policy suggestions which are relevant to Bangladesh and other developing countries.