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

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.