The Moderating Effect of Income Inequality on the Income–Emissions Relationship in G20 Countries

Fadilah, Zahra Rizky
Budiasih, Budiasih

Economic and Finance in Indonesia
Vol. 71, No. 2

This study analyzes the moderating effect of income inequality on the income–emissions relationship in the environmental Kuznets curve (EKC) framework. Findings indicate that the relationship is inverted U-shaped in middle-income G20 countries, but monotonically increasing in high-income G20 countries. Interestingly, income inequality moderates this relationship only in the latter group. These findings suggest that middle-income G20 countries should focus on raising income per capita to mitigate environmental degradation, while their high-income counterparts need to prioritize reducing income inequality to effectively decouple income from emissions.