The Study On Income Inequality Under Environmental Regulation

China’s economy has experienced rapid growth since 1978,but at the same time,China’s income gap has continued to widen with serious environment degradation and increasing energy demand.The ever-widening income gap has aroused widespread concern,and has brought great challenges to sustainable economic growth,fairness and justice,and social stability.Based on the empirical perspective of China’s development,this paper explores the issue of income inequality under environmental constraints.This article uses both macro and micro data to calculate and decompose the income gap.Based on the typical facts of income disparity and environmental regulation,this paper focuses on the impact of the following major factors on income inequality.Compared with the previous literature,this article mainly does the following work.First,this article uses micro-data to empirically analyze the impact of environmental regulations on income inequality and its internal reasons.The estimation results show that environmental regulation has worsened income distribution.Compared with the income gap between urban and rural areas,environmental regulation has greater impact in rural areas.In addition,environmental regulation mainly increases overall income inequality by widening the wage income gap.Through further analysis,it is found that the effect of environmental regulation on middleincome families is more obvious.From the perspective of income sources,the suppression effect of environmental regulation on wages first increases and then weakens as income increases.The impact on property income and transfer payments is not significant.There are also regional differences and urban-rural differences in the income distribution impact of environmental regulation.Second,using the 1998-2007 Chinese industrial enterprise data,this paper analyzes the effect of "Two Control Zones" issued by the central government.The study finds that environmental regulation policies will widen the wage gap within the industry and that the impact is regionally different.Through further analysis,it is found that the emission reduction policy will reduce the average wage and the number of workers in enterprises,and the decline in low-wage enterprises is even greater.Further,environmental regulations will also lead to the wage gap widening between skilled and unskilled workers,meaning that unskilled workers will bear more of the costs brought by environmental regulation.Finally,this article analyzes the impact of the "11th Five Year Plan" emission reduction policy on the entry and exit decision of enterprises using the data of industrial and commercial registration and cancellation.It is found that companies with higher pollution will tend to reduce registration in areas with higher environmental regulations.The impact of the policy on enterprises differs in regions and industries.Polluting enterprises with lower average wages,smaller industry scale,lower labor productivity,intensive labor and a higher proportion of unskilled workers are more inclined to exit.This firm exit may reduce employment opportunities for workers and low-wage income and unskilled workers will be more affected.Environmental regulatory policies may worsen income distribution through this indirect channel.In response to the above conclusions,this article believes that the benefits of environmental policies have uneven income distribution,which objectively exacerbates the problem of income gaps.Thus,environmental policies should be further strengthened.It is necessary to ensure low-income groups to enjoy more benefits with strategic deployment and planning.The research results of this paper have important policy implications for rethinking China’s environmental policies and coordinating income distribution.