Poverty, income inequality, and energy consumption based on EKC hypothesis: Evidence from developed and developing countries

Abstract The primary objective of this study is to examine the relationship between carbon dioxide (CO2) emissions, energy consumption, income inequality, and poverty within the framework of the Environmental Kuznets Curve (EKC) in 14 developed and ten developing countries over the period 2000–2018. We employed the Fourier unit root test and Dynamic Seemingly Unrelated Regression (DSUR) estimator to analyze the relationship between these variables. The results show that in developing countries, income inequality, poverty, and energy consumption positively affect CO2 emission. In contrast, in developed countries, there is no significant relationship between these variables. Moreover, we found out that the EKC hypothesis, which suggests an inverted U-shaped relationship between per capita income and CO2 emissions, is valid in developed countries and invalid in developing countries. We determined that the turning points obtained from regression analysis are outside of the sample period in five developing countries (Argentina, Armenia, Kazakhstan, Panama, and Uruguay). These results show that income inequality and poverty can indirectly affect environmental quality by energy consumption in developing countries.