The political economy of the Paris agreement. Income inequality and climate policy [WP]

Abstract

We empirically assess how both between-country inequality and within-country inequality relate to climate policy ambition as defined by NDC pledges of the Paris Agreement (COP21). We exploit the difference between high and low ambition targets submitted by parties to construct a climate policy ambition index. We find that both inequalities shape countries’ pledges: First, low income countries tend to be more ambitious in setting their pledges when external support is received. Second, within-country inequality is associated with (i) lower mitigation ambition in low and middle-low-income countries, and with (ii) higher mitigation ambition, although none statistically significant, for upper-high and high-income countries. Despite we cannot claim any causal mechanism, our results are discussed in terms of climate policy being a superior good in rich countries and elites benefiting from emitting economic activities in poorer countries