*Inequality and the Environment: Impact and Way Forward DOI: http://dx.doi.org/10.5772/intechopen.107246*


**Table 6.**

*Impact of inequality on CO2 emission – Upper Middle, Lower Middle- and* 

*Low-Income*

 *Countries.*

*Financial Crises – Challenges and Solutions*

**12**

#### *Inequality and the Environment: Impact and Way Forward DOI: http://dx.doi.org/10.5772/intechopen.107246*

The conditional effect of economic growth on income inequality (*gdp gini*\_*disp*) is positive and significant, inferring that CO2 emission could be aggravated if income inequality is high coupled with economic growth in all samples. The interaction between trade and income inequality is also positive and significant for all samples inferring the combined effects of international market integration and income inequality leads to more pollution. The third interaction variable between government environment expenditures and income inequality is negative and significant, suggesting the possibility of lower government environment expenditure given income inequality could increase CO2 emission. Results seem to support the Median Voter Theory that purported lower income inequality would lead to more interest in environmental pollution-related policies and public spending, hence, leading to lower pollution. These results are parallel to Magnani [35] and Kempf and Rossignol [31] albeit different sample, estimation technique, and data span. These results are also in line with Uzar [42] who suggests that a decline in income inequality will enhance the usage of renewable energy, leading to lower environmental pollutions due to CO2, SO2, methane, and other harmful emissions (**Table 5**).

**Table 6** shows the modified estimations using methane to proxy for environmental pollution as a measure of robustness. Results are relatively consistent with the baseline results. Using methane as a proxy, high-income countries show some support of the inverted *U*-shaped EKC. Trade has positive and significant effect on methane emission in for upper-middle income countries and lower-middle and low-income countries. In tandem with the results in the baseline regression, financial development is consistently positive and significant, inferring increase financial development promotes more production and consumption, hence, increasing emission of methane.
