Who bears the carbon burden of growth? A panel analysis for OECD economies

Abstract

Who bears the carbon burden of economic growth? This paper introduces the Distributional Environmental Kuznets Curve (DEKC), a framework that extends the traditional EKC to examine the dynamics of CO₂ emissions inequality between the top 10% and bottom 50% of the income distribution. Using panel data from 38 OECD countries over 1980–2023, we apply a battery of panel cointegration methods to estimate long-run relationships and derive three testable predictions from the model's distributional structure. The analysis confirms a robust inverted U-shaped relationship between per capita income and emissions inequality, with a turning point of approximately USD 108,000 (2015 prices) in the preferred specification. Beyond this baseline, three conditioning factors are identified: consumption heterogeneity amplifies the income–emissions inequality nexus (Prediction A); a larger middle class buffers the distributional impact of investment (Prediction B); and high-inequality countries exhibit steeper DEKC trajectories, reaching turning points at lower income levels (Prediction C). Investment is positively associated with emissions inequality, while trade openness and urbanization exert mitigating long-run effects. Carbon intensity deepens inequality, underscoring the distributional consequences of energy system composition. These findings indicate that growth alone does not resolve unequal carbon burdens, and that distributional structure — consumption patterns, middle-class size, and initial inequality — materially shapes the trajectory of emissions disparities during development.