Working Paper Series,
Trade Union Institute for Economic Research

Abstract: We augment the Stokey (1998) model by allowing agents to differ with respect to environmental quality and income in order to analyze the impact of income and environmental inequality, and of democratization on aggregate pollution. We find that the impact of a more equal income distribution depends on the degree of democracy. In a complete democracy a more equal income distribution generates, ceteris paribus, less pollution, which is consistent with indirect empirical evidence, whereas the opposite is the case if democratic rights are highly restricted. Further-more, a democratization is argued to typically lower both the income and the environmental quality of the median voter. In this case, if, in utility terms, the fall in environmental quality is worse than the fall in consumption the median voter decides to tighten environmental legislation so that aggregate pollution decreases.

Keywords: Economic growth and the environment; inequality; politics

JEL-codes: O41; Q20; Q30

21 pages, August 16, 2002

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Clas Eriksson and Joakim Persson, (2003), 'Economic Growth, Inequality, Democratization, and the Environment', Environmental and Resource Economics, vol 25, no 1, pages 1-16

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