The Nonlinear Dependence of Income Inequality and Carbon Emissions : Potentials for a Sustainable Future

Understanding the interconnected nature of rising carbon emissions and income inequality is crucial to achieve social and ecological sustainability. Multiple studies on their relationship suggest a complex association structure. Novel distributional copula models can uncover such complex interdependencies between carbon emissions and income inequality by analysing their conditional joint distribution. We use an unbalanced panel data set of 154 countries from 1960 to 2019 to compare the relationship in high-, middle- and low-income countries with regard to consumption, energy sources, the structure of the economy and the political system. Our results provide evidence for a nonlinear relationship and shed light on significant heterogeneous dependence structures. The estimates further allow to identify the influencing factors of falling in an area of potential social and environmental sustainability which reveals that only the joint activation of multiple channels opens the way for a sustainable future