The income-environment relationship: Does a logit model offer an alternative empirical strategy?

The empirical environmental Kuznets curve (EKC) literature is vast but far from conclusive. Many authors have analysed the existence of an EKC for various pollutants. Others have used to EKC framework to identify country characteristics that help to explain the income-environment relationship. In the standard framework within which environmental degradation is analysed using a second or third order polynomial in income plus a limited number of control variables. However, some authors question whether this standard framework is appropriate. This paper proposes an alternative to study the specific characteristics of countries that have experienced economic growth and an improving environment at the same time. We estimate a logit model and find an EKC-like relation between the probability that a country’s environment improves with economic growth and per capita GDP. Our evidence further suggests that the level of environmental damage is an important explanatory variable. We also confirm the importance of an open political system. These results indicate that the logit model could be a valuable alternative to test which country specific characteristics are associated with a negative IER.