The Impact of Urban and Rural Income Inequality on Natural Gas Consumption: The Case of Iran

T he environmental issues have received a lot of attention in recent years. Since environmental pollution is one of the issues that may damage the ability of future generations, it is important to examine the determinants of the environment quality. The main objective of this study is to investigate the impact of urban and rural income inequality on natural gas consumption in Iran. To this end, Iranian provincial panel data is used for the period 2006-2015. The income inequality variable is measured with Theil index and Gini coefficient. To estimate the mode the l, Generalized Method of Moments (GMM) system is used. The results indicate a significant negative impact of urban and rural income gap on per capita consumption of natural gas as a benchmark for environmental performance. Furthermore, the current research findings show that the impact of rural and urban income inequality on natural gas consumption depends on income level. There is also a positive and significant relationship between urban level and per capita consumption of natural gas. The findings confirm that there exists an inverted U-shaped relationship between per capita GDP and natural gas consumption.