Research On The Impact Of Carbon Emission Trading Policy On Income Inequality Of Urban Residents

As a well-established environmental regulation policy,the carbon trading system aims to promote the improvement of environmental quality.However,carbon emissions trading policy permeates all aspects of the social economy,and its process of regulating enterprises’ production behaviour affects the economic efficiency of enterprises and the wage income of labourers,and influences the distribution of social wealth.Therefore,based on Chinese provincial panel data from 2009 to 2017,this study uses the implementation of carbon trading policies as a quasi-natural experiment and employs a double difference-in-difference(DID)model,aiming to assess the impact of carbon trading policies on income gap of urban residents and its mechanism of action,with the following results.First,the estimated coefficient of DID is significantly positive at the 5% level,regardless of whether control variables are added.This indicates that the carbon emissions trading policy significantly increases the Gini coefficient of urban residents’ income.This result suggests that carbon trading policies significantly increase the income gap of urban residents,and this finding holds after several robustness tests.Secondly,carbon emissions trading policies can promote technological innovation and industrial structure upgrading in pilot provinces,and pass the parallel trend test,while the increase in technological innovation and industrial structure upgrading are important channels through which carbon emissions trading policies affect urban residents’ income gap.Carbon emissions trading policies can increase the income gap of urban residents by promoting technological innovation and industrial structure upgrading.Finally,carbon emissions trading policies have a heterogeneous impact on the income gap of urban residents in different regions.The heterogeneity test of regional human capital levels shows that the higher the level of human capital,the weaker the negative policy effect of carbon emissions trading policy on urban residents’ income gap.Therefore,an increase in the level of human capital can provide a good environment for mitigating the negative effects of carbon emissions trading policies on the income distribution of urban residents.Taking China,the largest developing country,as a sample,this study demonstrates the negative impact of carbon emissions trading policies on the income distribution of urban residents,providing new empirical evidence on the impact of carbon emissions trading policies on urban residents’ income gap and offering Chinese experience to global policy makers in developing carbon emissions trading policies and narrowing the income gap in top-level policy design and practice.