Is inequality harmful for the environment in a growing economy ?

In this paper we investigate the relationship between inequality and the environment in a growing economy from a political economy perspective. We consider an endogenous growth economy, where growth generates pollution and a deterioration of the environment. Public expenditures may either be devoted to supporting growth or abating pollution. The decision over the public programs is done in a direct democracy, with simple majority rule. We prove that the median voter is decisive and show that inequality is harmful for the environment: the poorer the median voter relative to the average individual, the less she will tax and devote resources to the environment, preferring to support growth. ∗We wish to thank participants to seminars in the University of Paris-1 Panthéon-Sorbonne, the T2M 2004 meeting, CORE, and especially Rabah Amir, Pierre Pestieau, Katrin Millock and Lionel Ragot for helpful comments on earlier drafts of this paper. The ideas expressed here and the remaining errors are of our own responsibility.