The Impact of Urban and Rural Income Inequality on Natural Gas Consumption: The Case of Iran

Authors

Department of Economics, Faculty of Social Sciences, Razi University, Iran

Abstract

T





he environmental issues have received a lot of attention in recent years. Since environmental pollution is one of the issues that may damage the ability of future generations, it is important to examine the determinants of the environment quality. The main objective of this study is to investigate the impact of urban and rural income inequality on natural gas consumption in Iran. To this end, Iranian provincial panel data is used for the period 2006-2015. The income inequality variable is measured with Theil index and Gini coefficient. To estimate the mode the l, Generalized Method of Moments (GMM) system is used. The results indicate a significant negative impact of urban and rural income gap on per capita consumption of natural gas as a benchmark for environmental performance. Furthermore, the current research findings show that the impact of rural and urban income inequality on natural gas consumption depends on income level. There is also a positive and significant relationship between urban level and per capita consumption of natural gas. The findings confirm that there exists an inverted U-shaped relationship between per capita GDP and natural gas consumption.

Keywords


Arrelano, M., & Bond, S. (1991). Some Tests of Specification in Panel Data: Monte Carlo Evidence and an Application to Employment Equations. Review of Economics and Statistics, 58, 277-297.

 

Arrelano, M., & Bover, M. (1995). Panel Data Econometrics. Journal of Econometrics, 68(1), 29-51.

 

Baek, J., & Gweisah, G. (2013). Does Income Inequality Harm the Environment? Empirical Evidence from the United States. Energy Policy, 62, 1434-1437.

 

Benjamin, D., Brandt, L., & Giles, J. (2004). The Dynamics of Inequality and Growth in Rural China: Does Higher Inequality Impede Growth? IZA Discussion Papers, Retrieved from

https://www.econstor.eu/bitstream/10419/33923/1/532182103.pdf/

 

Cutler, D. M., & Lawrence, F. K. (1991). Macroeconomic Performance and the Disadvantaged. Brookings Papers on Economic Activity, 2, 1-74.

 

Ebrahimi, M., Babaei Agh Esmaili, M., & Kafili, V. (2016). Income Inequality and Environmental Quality: A Case Study of Iran. Journal of Economic Modeling,2, 59-79.

 

Fotros, M. H., & Barati, J. (2010). Analysis of Effective Factors Affecting Changes in CO2 Emissions of Power Plants Sector of Iran (1997-2008). Journal of EconomicModeling Research, 1(1), 135-155.

 

Hao, Y., Chen, H., & Zhang, Q. (2016). Will Income Inequality Affect Environmental Quality? Analysis Based on China's Provincial Panel Data. Ecological Indicators, 67, 533-542.

 

Harati, J., Dehghani, A., Taghizadeh, H., & Amini, T. (2015). The Effects of Economic and Political Inequality on Quality of Environment in Selected Countries: GMM Panel Analysis. Journal of Environmental and Natural Resource Economics, 1, 197-232.

 

Heerink, N., Mulatu, A., & Bulte, E. (2001). Income Inequality and Environment: Aggregation Bias in Environment Kuznets Curves. Ecological Economics, 38(3), 359-368.

 

Huang, B. N., Hwang, M. J., & Yang, C. W. (2008). Causal Relationship between Energy Consumption and GDP Growth Revisited: A Dynamic Panel Data Approach. Ecological Economics, 67(1), 41-54.

 

Jin, Y., Hongbin, L., & Binzhen, W. (2011).Income Inequality, Consumption, and Social-status seeking.  Journal of Comparative Economics, 39, 191-204.

 

Kuznets, S. (1955). Economic Growth and Income Inequality. American Economic Review, 45, 1-28.

 

Magnani, E. (2000).The Environmental Kuznets Curve, Environmental Protection Policy and Income Distribution. Ecological Economics, 32, 431-443.

 

McConnell, K. E. (1997). Income and the Demand for Environmental Quality. Environment and Development Economics, 2(4), 383-399.

 

Murphy, K. M., Shleifer, A., & Vishny, R. (1989).Income Distribution, Market Size, and Industrialization. The Quarterly Journal of Economics, 104(3), 537-564.

 

Padilla, E., & Serrano, A. (2006). Inequality in Co2 Emissions A cross Countries and its Relationship with Income Inequality: A Distributive Approach. EnergyPolicy, 34, 1762-1772.

 

Ravallion, M., Heil, M., & Jalan, J. (2000). Carbon Emissions and Income Inequality. Retrieved from

https://academic.oup.com/oep/article-abstract/52/4/651/2361777.

 

 

 

Selden, T. M., & Song, D. (1994). Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions? Journal of Environmental Economics and Management, 27, 147-162.

 

Slesnick, D. T. (1994), Consumption, Needs and Inequality. International Economic Review, 35, 677-703.

 

Stern, D. I., Common, M. S., & Barbier, E. B. (1996). Economic Growth and Environmental Degradation: the Environmental Kuznets Curve and Sustainable Development. World Development, 24, 1151-1160.

 

Terner, A., & Batman, I. (2000). Environmental Economics (Trans. S. Dehghanian, E. Koucheki and A. Kolahi). Mashad: Ferdowsi University Press.

 

Torras, M., & Boyce, J. K. (1998). Income, Inequality and Pollution: a Reassessment of the Environmental Kuznets Curve. Ecological Economics, 25, 147-160.

 

Wang, C., & Wan, G. (2015). Income Polarization in China: Trends and Changes. China Economic Review, 36, 58-72.

 

Zhang, C., & Zhao, W. (2014). Panel Estimation for Income Inequality and CO2 Emissions: a Regional Analysis in China. Applied Energy, 136, 382-392.

 

Zhang, C., & Lin, Y. (2012). Panel Estimation for Urbanization, Energy Consumption and CO2 Emissions: A Regional Analysis in China. Energy Policy, 49, 488-498.