The effect of political stability, carbon dioxide emission and economic growth on income inequality: evidence from developing, high income and Belt Road initiative countries

The reduction of income inequality and environmental frailty are important factors which can help achieve sustainable development. In this context, it is important to investigate the nexus between income inequality and carbon dioxide emission by considering the role of political stability. This paper examines the effect of political stability, economic growth, financial development, and carbon dioxide on income inequality in developing countries, high-income countries, and the Belt Road initiative (BRI) countries from 2002 to 2019. By employing a two-step generalized method of moments and panel quantile regression, the findings show that carbon dioxide emission, financial development, and political stability rise income inequality while economic growth significantly reduces income inequality in developing countries. In the case of high-income countries, political stability and carbon dioxide negatively affect income inequality while financial development rise income inequality. In the case of BRI countries, political stability, economic growth, and carbon dioxide emission significantly reduce income inequality. Our findings have considerable policy implications regarding reducing income inequality in the sample countries.

Automated summary

The paper investigates the relationship between income inequality, carbon dioxide emission, financial development, and political stability. The findings show that economic growth is effective in reducing income inequality, while carbon dioxide emission, financial development, and political stability can increase income inequality in different country categories.