Does Market-Based Allocation of Environmental Resources Affect Income Inequality? Evidence from China’s Carbon Emissions Trading Pilots

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides empirical evidence and mechanism analysis on the distributional impacts of carbon pricing, useful for climate policy-equity research.

🏢実務担当者:Policymakers can learn about the time lag and regional heterogeneity in carbon pricing's equity effects for better policy design.

🏛政策担当者:Highlights the importance of considering income inequality when designing carbon markets and suggests that market-based approaches can be equitable under certain conditions.

Abstract This paper investigates the impact of market-based environmental regulation on income inequality—a critical nexus between climate governance and social equity. Employing a multi-period difference-in-differences model with panel data from 284 Chinese prefecture-level cities (2004–2024), we treat the carbon emissions trading pilot (CETP) as a quasi-natural experiment. The results show that the CETP significantly reduces the urban–rural income ratio—a proxy for carbon equity, defined as the distributional fairness of climate policy outcomes—by an average of 0.0296 (p < 0.05). This effect exhibits a pronounced time lag, becoming statistically significant only in the seventh period post-implementation (approximately three and a half years), suggesting that the policy's distributional impact operates indirectly through gradual economic restructuring. Three mechanisms underlie this reduction: (1) a marketization effect, whereby carbon pricing optimizes factor allocation and curbs administrative distortions; (2) a green innovation effect, which fosters labor-friendly technologies and generates inclusive employment for rural migrants; and (3) an industrial upgrading effect, through which energy-intensive sectors transform and service sectors expand, creating efficiency gains and public service spillovers that benefit rural households. Heterogeneity analysis reveals stronger effects in eastern regions, underscoring the importance of market maturity and institutional capacity. Moreover, by constraining high-carbon investments, the policy enhances intergenerational equity through the preservation of environmental capacity for future generations. This study advances the theoretical understanding of climate policy–equity linkages and offers empirical evidence for aligning carbon neutrality goals with China’s common prosperity agenda.

• crossref https://doi.org/10.21203/rs.3.rs-9261416/v1first seen 2026-05-20 05:54:27