Discussion Paper Details

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Title: On Income Inequality and Green Preferences

Author(s): Laura Marsiliani and Thomas I Renström

Publication Date: January 2003

Keyword(s): environmental policy, inequality, political economy and redistribution

Programme Area(s): Public Economics

Abstract: We derive conditions of individual preferences and technology that give rise to a negative correlation between income inequality and environmental protection. We present a class of models (which captures a static model as well as an overlapping-generations model) in which individuals differ in earning abilities, and where a representative takes the decisions on a pollution tax and a redistributive tax. We show that, if private consumption goods and the environment are non-inferior goods, and the decisive individual has lower ability than the average, they will prefer a higher redistributive tax and a lower pollution tax.

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Bibliographic Reference

Marsiliani, L and Renström, T. 2003. 'On Income Inequality and Green Preferences'. London, Centre for Economic Policy Research.