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Climate Change and Inequality: Evidence from the United States

Author

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  • Carolyn Chisadza

    (Department of Economics, Hatfield Campus, University of Pretoria, Lynnwood Road, Pretoria 0028, South Africa)

  • Matthew Clance

    (Department of Economics, Hatfield Campus, University of Pretoria, Lynnwood Road, Pretoria 0028, South Africa)

  • Xin Sheng

    (Lord Ashcroft International Business School, Anglia Ruskin University, Chelmsford CM1 1SQ, UK)

  • Rangan Gupta

    (Department of Economics, Hatfield Campus, University of Pretoria, Lynnwood Road, Pretoria 0028, South Africa)

Abstract

This paper examines the effects of climate change on income inequality in the United States. Computing impulse response functions (IRFs) from the local projections’ method, we empirically show that there is an immediate temporary positive response in income inequality from rising temperatures within the first year. We also observe differences in the effects of temperature growth on inequality across different classifications, mainly states with high inequality and low temperature growth are more susceptible to changes in temperature growth than states with already high temperature growth and high inequality growth. States with low inequality growth exhibit similar positive effects on income inequality across low- and high-temperature-growth classifications. We find that the initial positive effect on income inequality is not permanent. However, if the effects of rising temperatures are unabated in the earlier periods, income inequality starts to rise in the later periods. Our results highlight an important pathway, that climate change can negatively affect sustainable development through increased income inequality.

Suggested Citation

  • Carolyn Chisadza & Matthew Clance & Xin Sheng & Rangan Gupta, 2023. "Climate Change and Inequality: Evidence from the United States," Sustainability, MDPI, vol. 15(6), pages 1-11, March.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:6:p:5322-:d:1099771
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    Cited by:

    1. Swapnanil SenGupta & Aakansha Atal, 2024. "Income inequality in the face of climate change: an empirical investigation on unequal nations, vulnerable regions and India," SN Business & Economics, Springer, vol. 4(8), pages 1-33, August.
    2. Petre Caraiani & Carolyn Chisadza & Rangan Gupta, 2024. "Does Climate Affect Investments? Evidence from Firms in the United States," Working Papers 202448, University of Pretoria, Department of Economics.
    3. Bruno Ćorić & Rangan Gupta, 2023. "Economic disasters and inequality: a note," Economic Change and Restructuring, Springer, vol. 56(5), pages 3527-3543, October.

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