Inequality and the adoption of climate mitigation policies

This paper examines the relationship between income inequality and the adoption of climate mitigation policies in G20 countries between 1996 and 2020. Using a panel dataset on national climate polices and different measures of inequality, we estimate fixed-effects and correlated random-effects models to assess how inequality interplay with average income to influence climate policy adoption. The results indicate that both inequality and GDP per capita play a significant role, with their interaction revealing a non-linear effect: higher inequality tends to support policy adoption in lower-income countries, but reduces it in higher-income contexts. We identify a switching point in the average income level, beyond which inequality is associated with fewer climate policies. Further analysis of the income distribution shows that the share held by the bottom 10% of the population is positively related to policy adoption, whereas concentration at the top has a more mixed effect. These findings suggest that the distributional structure of income shapes the demand for, and political feasibility of, climate policies. The study highlights the importance of accounting for inequality when analysing the drivers of climate governance and provides evidence that economic growth alone does not ensure stronger climate action.