Effect of Relative Redistribution on Environmental Pollution in Oil-Exporting Countries

Abstract

Objective: Recent literature emphasizing the importance of income distribution for pollution. The GINI index is the most common indicator for measuring income inequality in previous studies. The new literature has focused on relative redistribution, which is quantified by the GINI coefficientis defined as the difference between the GINI based on market income and GINI based on disposable income. Thus, this study relies on the redistributive effect of taxes and transfers and its impact on carbon dioxide emissions.Methods: The study is conducted using aggregated data from oil-exporting countries including Canada, the United States, the UK, Mexico, the Netherlands, Russia, and China between 2010 and 2020 by using a simultaneous equations system consisting of two equations so that economic growth and pollution emission are as endogenous variables. Elative redistribution, good governance, oil income, trade openness, and CO2 emission are the exogenous variables. Results: Based on model estimates, income inequality, good governance, and oil income have a positive and significant impact on economic growth over the years studied, while inequalities in human development and population growth rates have a negative impact. Economic growth and trade openness also have a negative and significant impact on the spread of pollutionConclusion: Taxes and transfer payments, as redistribution tools can stimulate economic growth. Relative redistribution as a more equitable way can lead to increased economic growth and economic growth reduces carbon dioxide emissions. Therefore, providing an appropriate standard of income inequality can help to better understand and formulate effective policies for income equality.

Keywords

• relative redistribution
• gini coefficient
• environmental pollution
• oil-exporting countries