Is Inequality Harmful for the Environment in a Growing Economy?
Résumé
In this paper, we investigate the relationship between inequality and the environment in a growing economy from a political-economy perspective. We consider an endogenous growth economy, where growth generates
pollution and a deterioration of the environment. Public
expenditures may either be devoted to supporting growth or abating pollution. The decision over the public programs is made in a direct democracy, with simple majority rule. We prove that the median voter is decisive and show that inequality is harmful for the environment: the poorer the median voter relative to the average individual, the less she will tax and devote resources to the environment, preferring to support growth.
pollution and a deterioration of the environment. Public
expenditures may either be devoted to supporting growth or abating pollution. The decision over the public programs is made in a direct democracy, with simple majority rule. We prove that the median voter is decisive and show that inequality is harmful for the environment: the poorer the median voter relative to the average individual, the less she will tax and devote resources to the environment, preferring to support growth.