Reducing inequality is not antithetical to solving the climate crisis: An analysis of disposable income shares and carbon emissions for Canada's provinces

The authors conduct a comprehensive analysis of the relationship between carbon emissions and multiple characteristics of income inequality for the Canadian provinces for the 1999 to 2023 period. Particular attention is given to how disposable income shares for different groups affect province-level emissions. The analysis yields multiple findings of substantive relevance. First, the income share of the top quintile has a nontrivial positive effect on emissions in both the short-run and the long-run. This effect is found to be statistically asymmetrical, where a unit decrease in the income share has a proportionally larger effect on decreasing emissions than a unit increase does in increasing carbon emissions. Second, greater shares of disposable income going towards groups below the top quintile have negative short-run and long-run effects on carbon emissions, and these effects are statistically symmetrical. Finally, the effects of all income share measures are statistically equivalent for emissions from different sectors, robust to various model specifications, and not sensitive to the inclusion of different economic and demographic controls. Overall, the results highlight the climate mitigation potential of reducing income inequality in particular ways, and calls into question analytical arguments suggesting that addressing inequality is antithetical to solving the climate crisis. • Effects of income inequality characteristics on CO2 emissions are modeled • Focus is on CO2 emissions and inequality for Canada's provinces • Disposable income share of top quintile positively affects emissions • Disposable income shares of bottom four quintiles negatively affect emissions