Reducing CO2 emissions, economic and gender inequality: Can we move in the right direction simultaneously?
By Nuria Badenes (IEF), José Mª Labeaga (UNED) and Ester Martínez-Ros (UC3M)
There is now sufficient evidence to affirm that the impacts of environmental and climate change are not gender neutral. In both developing and advanced economies, women are more vulnerable than men to the effects of climate change (less access to finance and education, overrepresented in low-income groups, the most affected by pollution and environmental damage). Women tend to display a higher sensitivity to environmental concerns, but severely underrepresented in the decision-making processes of global climate leadership.
Gender inequality is not the main target when proposing policies to achieve justice. More tangible magnitudes, such as income or wealth, have traditionally been the distributional target for reducing inequality. A review of the literature reveals some research linking economic inequality and emissions, consideration of gender and economic inequality, and the effect of gender inequality on emissions. However, the simultaneous consideration of emissions, gender inequality and economic inequality remains unexplored.
In this post, we figure out the relationship among gender and economic inequality, and CO2 emissions in OCDE countries. We find it relevant to consider the gender-environment link since environmental actions may affect women and men differently and may hinder gender equality. The simultaneous consideration of economic inequalities and emissions is also relevant, especially the search for contexts in which both are reduced without having to give up either.
Although the Sustainable Development Goals framework usually covers these three issues separately, there is a great scope for their joint analysis. To this end, we create a new database form different sources covering 19 countries and the period 2014-2019 to capture dimensions related to country characteristics in gender, income, and wealth inequality, as well as emissions. Our results show some potential for public policies aimed at reducing both inequalities to fight at the same time in favour of emissions reductions.
Economic inequality and emissions
Economic inequality is measured using three separated indicators of economic distribution:
- the percentage of income held by the richest 1%,
- the percentage of wealth in the hands of the richest 10%,
- the percentage of income below the median.
The effects of all three indicators are negative, but only the percent of income in hands of the richest 10%, and the percent of income below the median are significant. This offers a very interesting result for the implementation of redistributive policies that reinforce the potential to reduce gender inequality at the same time. Moreover, the recommendations are not set according to changes in overall inequality, but by specifying how the distribution of income and wealth influences the different segments of the distribution.
Traditionally, economic inequality has been measured using the Gini index of equivalent income, but it is not significant in any specification. The aim of this approach is to show alternative ways of measuring income and wealth inequality, but the Gini index does not show sufficient variation across countries and, by synthesizing information on the entire distribution into a single index, relevant information on inequality is lost.
Gender inequality and emissions
The gender inequality index seems relevant to explain the evolution of emissions and has the expected positive sign, i.e., the higher the gender inequality, the higher the emissions. Not surprisingly, the greatest potential for reducing emissions by reducing gender inequality appears in countries with still low emission levels, which at the same time have the highest levels of gender inequality. These baseline results also indicate that R&D spending increases emissions, but productivity and its square are only significant at 1 percent. The trend is significant, and we interpret its effect as a proxy of unobserved technological changes over time associated with higher emission levels.
Economic and gender inequalities and emissions
Our research focuses on considering both inequalities together and finding out how this interaction affect CO2 emissions in different OECD country spectra. Specifically, we find that the percentage of wealth held by the richest 10 percent turns on significant when we include the gender inequality index. The results indicate that greater wealth and income inequalities (considering more resources in the hands of the highest percentiles of the income and wealth distribution) leads to lower emissions. This result does not necessarily pose a trade-off between achieving economic equality and reducing emissions. Reducing income in the hands of the richest 1 percent would increase emissions but distributing that 1 percent below the median would reduce emissions, offsetting the above increase. Considering distributional brackets instead of a traditional index such as the Gini to capture inequality shows that improvements in both redistributive and environmental terms are feasible. The economic inequality variables also maintain similar magnitudes and significance when included together with the gender inequality indices. Again, in wealth and income inequalities countries also are affected by gender inequalities, deepening the gap between the well-being welfare of most of the society, especially in the case of women. We also want to figure out whether both inequalities reinforce them, for which we obtain the results of interactions. Only the percentage of income below the median and gender inequality appear to be significant, but none of the remaining interactions. This indicates that both inequalities act separately but may also indicate that we have a slight variation of emissions with respect to the mean and that some features of country heterogeneity are not well captured.
Additionally, we think that gender inequality may be conditioned to different emission levels, so we repeat the exercise according to emission quantiles. Gender inequality is significant and exhibits the expected positive sign in the most polluting group in the subsample estimation by the level of emissions. In this group we obtain a negative and significant coefficient of the gender interaction effect with the percent of income below the median, so that when income is better distributed, the effect of gender inequality alleviates the emissions. Finally, we consider a different measure of emissions instead of an index, which is the number of annual tonnes of emissions per capita. The interaction of gender inequality and the percentage of income held by the richest 1 percent is significant and positive, indicating that the accounting of both inequalities increase the effect of emissions.
Country matters
Going further, we tried to understand whether the behaviour of different countries matters, so we conducted different analyses trying to see how the results vary when testing different country groupings. In countries with a high correlation between emissions and gender inequality, greater gender inequality exacerbates emissions. The magnitude of the negative coefficients associated with interactions shows that given a level of gender inequality, even if economic inequality were to increase (leading to a decrease in emissions) the isolated effect of gender inequality could not be offset.
We use three other different classifications to account for country patterns in terms of emissions and gender inequality, considering the level of innovation, geographic location or whether they are advanced countries or not. A country is considered advanced when it shows a small change in emissions during the period of analysis or a small level of gender inequality. Non-advanced countries show a large change in emissions or a high level of gender inequality. A second classification considers the level of innovation. The classification of countries by geographical area distinguishes among Mediterranean, Central, Nordic countries and the rest. There are no significance differences between the most advanced versus the least advanced countries; however, when we look at the ranking of innovators, the overall effect of gender inequality (and their interactions with economic inequalities) follow an increasing monotonic behaviour consistent with more innovative countries. In leading innovating countries, higher gender inequality produces higher emissions. In terms of geographical classification, eastern and southern countries show a smaller effect of gender inequality on emissions.
Conclusion
We contribute to the study of climate change by including the two dimensions of inequality considered (income-wealth and gender) to identify their effect on the level of CO2 emissions in OECD countries. Moreover, this effect is more important in countries whose emissions are in the bottom quartile. By relating the additional effect of gender on the income inequality nexus, we also confirm a greater impact in low emission countries. This encourages us to suggest that the use of public policies to reduce both inequalities can help mitigate climate change.