Environmental Kuznets Curve: evidence from the British Household Panel Survey

Summary

 A well-known hypothesis providing support for a policy that emphasizes economic growth at the expense of environmental protection is the environmental Kuznets curve (EKC) hypothesis. Although this relation has been mainly explored at the macro-economic level, there are few researches examining micro-economic level. This study looks for empirical evidence between air pollution and income using social data from the British Household Panel Survey during the period 1991–2009. The first approach refers to a fixed effects model, the second to dynamic panel data and Arellano–Bond GMM, while the third approach concerns a binary Logit model with fixed effects. The current study's fixed effects results show that there is no evidence of EKC hypothesis for the air pollutants examined. On the contrary, there is a strong evidence of EKC hypothesis for the air pollutants examined based on Arellano–Bond GMM and logit model's results with fixed effects and all the types of household income indicating that EKC hypothesis holds. Furthermore, regarding personal income, using the Arellano–Bond GMM methodology, the EKC hypothesis does not hold. This indicates that air pollution and income might be based on communitarian arrangements instead of on individualistic actions.