How Does Carbon Emission Reduction Efficiency Affect Regional Income Inequality? The Mediator Effect of Interregional Labor Flow

Abstract

Global income inequality is widening and carbon emissions remain high. So, reducing carbon emissions and income gap are urgent challenges. The purpose of this paper is to analysis how carbon emission efficiency influences the region income inequality. The improvement of carbon emission reduction efficiency has widened the regional income inequality with the flow of high-tech labor as an intermediary variable in China. Methods used in this article are mediating effect model and DEA method. This paper constructs a disposable income model of income and health costs, where health costs are a function of carbon reduction. If income is fixed, then the expectations of disposable income will change as the level of carbon emission reduction changes. This study finds that the disposable income expectations of high-income areas increases, while the disposable income expectations of lower-income areas decrease with the improvement of carbon emission reduction efficiency. High-income regions attract high-income labor from other regions, resulting in the widening of regional income inequality under the constraint of high cost of living. This result is verified by the data of China from 2007 to 2017. The regression model with Geordie coefficient as the dependent variable, carbon emission reduction efficiency as the core independent variable, gravitation of high-tech talent as the mediator variable, and urbanization rate, educational level, social security coverage, and highway and railway traffic mileage as control variables not only verifies the above results but also finds that high-tech talents’ flow is not the only intermediary between carbon emission reduction efficiency and regional income inequality. This paper finds that when the carbon emission reduction efficiency increases by one unit, the income inequality gap of 25 provinces increases by 0.0202 units, provinces with high carbon emission reduction efficiency increases by 0.107 units, and provinces with medium carbon emission reduction efficiency increases by 0.026 units. However, the income inequality gap of provinces with low carbon emission reduction efficiency decreases by 0.0390 units. The carbon emission reduction efficiency of the high and medium carbon emission reduction efficiency groups is proportional to the income inequality, while the low carbon emission reduction efficiency group is the opposite, when the carbon emission reduction efficiency is grouped into high efficiency group, medium efficiency group, and low efficiency group. The reason for this result is that the high carbon emission reduction efficiency of the former attracts high-income high-tech talent, while the latter's narrowing regional income inequality benefits from the reduction costs of health and the government’s ecological compensation. The effective measures to narrow the income inequality are to implement carbon emission reduction policy, industrial policy, education investment policy, and public service policy, according to the above findings.

Environmental Justice: The Economics of Race, Place, and Pollution

“…These studies have yielded mixed findings. 6 Many of them have approached the problem as a chicken-or-the-egg question: Which came first, the siting of facilities in a poor, non-white neighborhood, or the sorting of such households near pollution? However, this problem has proven difficult to unscramble.…”

Evaluating Regional Carbon Inequality and Its Dependence with Carbon Efficiency: Implications for Carbon Neutrality

“…Zhong et al (2020) [23] focus on carbon and energy inequality between and within ten Latin American and Caribbean (LAC) countries. [24] analyze the relationship between carbon emission efficiency and the regional income inequality, and find that when the carbon emission reduction efficiency increases by one unit, the income inequality gap of 25 provinces increases by 0.0202 units; provinces with high carbon emission reduction efficiency increases by 0.107 units, and provinces with medium carbon emission reduction efficiency increases by 0.026 units. Using the provincial panel data of the Chinese residential sector from 2005 to 2017, [31] examine residential CO 2 emission inequality (carbon inequality) and its driving factors from the static and dynamic perspectives to provide empirical support for the formulation of emission reduction policies and the allocation of regional emission reduction quotas.…”

“…Third, few of the existing literature discussed the possible policy for coordinating the "equality" and "efficiency" issues of carbon emission under the carbon neutrality background. Finally, in the literature, the economic dependence of carbon emission has been found in governmental expenditures, energy consumption (Fan et al, 2020) [22], energy inequality (Zhong et al, 2020) [23], and regional income inequality [24]. Nevertheless, very few of the current works discussed the "trade-off" between carbon efficiency and carbon inequality.…”