Wealth-based common prosperity and household CO2: Evidence from China

Can China's pursuit of common prosperity reduce household carbon emissions (HCEs) through equitable wealth growth and distribution? Using panel data from China Family Panel Studies (2014–2018), merged with sectoral emission intensities from Carbon Emission Account & Datasets and Input-Output Tables, we investigate the causal impact of wealth-based common prosperity on consumption-based HCEs. We measure common prosperity through Sen's welfare function and employ instrumental variable estimation to address endogeneity concerns. Our findings reveal that wealth-based common prosperity significantly reduces HCEs through three channels: enhanced environmental consciousness, accelerated clean energy adoption, and reduced conspicuous consumption. Importantly, these effects are more pronounced among middle-and-higher income households and in regions with greater government expenditure. These results provide empirical support for policy complementarity between wealth growth, distribution and carbon neutrality.