Income inequality and CO2 emissions: nonlinear evidence from Turkey

The income inequality-economy link has been argued by researchers a long time. But the impact of income inequality on environmental pollution is a new investigation topic for developing countries. Turkey is well known as an emerging economy which has a high level of income inequality and CO₂ emissions. Therefore, this paper concentrates on the income inequality-CO₂ emissions link in Turkish economy by applying a nonlinear analysis. This paper integrates economic growth and financial development to the CO₂ emissions specification over the period of 1987–2019. We employ the nonlinear autoregressive distributed lag approach to explore the long-run nonlinear linkages between the series. Our findings reveal an asymmetric cointegration among variables. Positive and negative income inequality shocks positively affect CO₂ emissions implying that positive and negative shocks of income inequality enhance CO₂ emissions in the long run. Negative economic growth shocks decrease CO₂ emissions, while positive shocks to financial development increase CO₂ emissions in the long run. We provide important policy suggestions that might be useful to the policymakers to decrease CO₂ emissions in Turkey.