Inequality and Climate Change: The Within-Countries Distributional Effects of Global Warming

30 Pages Posted: 16 Feb 2023

See all articles by David Castells-Quintana

David Castells-Quintana

Autonomous University of Barcelona - Department of Applied Economics; University of Barcelona - Regional Quantitative Analysis Group (AQR-IREA)

Thomas K. J. McDermott

University of Galway

Date Written: February 14, 2023

Abstract

Climate change is already impacting several development outcomes, including economic growth, human health and mortality, agricultural productivity and even conflict. Moreover, the impact of climate change is expected to be unevenly distributed across locations and population groups. In particular, the worse effects of climate change are expected to be felt in low-income countries. Similarly, within countries, the most vulnerable to these effects are typically low-income regions and households. While the literature to date has provided evidence of the between-countries inequality-increasing effect of global warming, it has not yet done so for inequality within countries. In this paper, we empirically explore the connection between climate change and income distribution within countries. To do so, we build a global panel dataset combining gridded data on climate variables with gridded population data, country-level data on several income inequality measures (including interpersonal Gini coefficients and indices of concentration of income), gridded data on night-time lights to construct measures of spatial inequality, and data on several development outcomes. Using panel-data econometric techniques, we find a clear positive and statistically significant relationship between rising temperatures and increases in within-country inequality. The role of rising temperatures is robust to a range of controls, different specifications and estimation techniques. Finally, we explore potential mechanisms behind this temperature-inequality relationship.

Keywords: inequality, climate change, development

JEL Classification: O1

Suggested Citation

Castells-Quintana, David and McDermott, Thomas K. J., Inequality and Climate Change: The Within-Countries Distributional Effects of Global Warming (February 14, 2023). Available at SSRN: https://ssrn.com/abstract=4357764 or http://dx.doi.org/10.2139/ssrn.4357764

David Castells-Quintana (Contact Author)

Autonomous University of Barcelona - Department of Applied Economics ( email )

Departamento de Economía Aplicada
Bellaterra, Barcelona 08193
Spain

University of Barcelona - Regional Quantitative Analysis Group (AQR-IREA) ( email )

Tower IV
Av. Diagonal 690
Barcelona, 08034
Spain

Thomas K. J. McDermott

University of Galway ( email )

University Road
Galway, Co. Galway
Ireland

HOME PAGE: http://https://thomaskjmcdermott.wordpress.com

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