The Impact of Income Inequality on Renewable Energy Consumption in Countries with Different Economic Development Levels

Natalia B. Davidson, Marina D. Somina, Oleg S. Mariev

Ural Federal University named after the First President of Russia B.N. Yeltsin, Yekaterinburg, Russia

Abstract

Sustainable development has been a major topic of policy discussions, drawing attention to determinants of energy transition. Investigating the link between income inequality and renewable energy consumption (REC) is essential for advancing sustainable development objectives. The aim of this paper is to investigate the impact of income inequality on REC. The hypotheses are the following. First, income inequality negatively affects REC. Second, national income share of top 1% of the richest population affects REC relatively more than the Gini index. Third, developed countries experience relatively greater impact of inequality on REC. The research procedure is based on panel data covering 160 countries over the period 2000–2022. Utilising the fixed effects model with Driscoll-Kraay standard errors to account for spatial correlation between countries, we examine the impact of income inequality, GDP per capita, trade openness, human development, and corruption on energy transition in developed, transition, and developing countries, addressing different aspects of income inequality: the income share held by the richest 10% and 1% of population, and the Gini index. We find that income inequality decreases REC in all groups of countries, while income share of the richest 1% affects REC the most, and the highest impact of inequality is observed in developed economies. Theoretical and practical contribution of this study is the following. First, we account for differences in economic development between countries. Second, we employ three inequality indicators. Our findings imply that decreasing inequality, combating corruption, promoting renewable energy investment, and improving human capital would facilitate the REC thus mitigating climate change.

Keywords

income inequality; renewable energy consumption; corruption; trade openness; economic growth; human development; Driscoll-Kraay method.

JEL classification

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Acknowledgements

This study was supported by the grant of the Russian Science Foundation № 23-18-01065 «Economic Potentials of Russian Mineral Industry towards Global Energy Transition amid Geopolitical Tension».

About Authors

Natalia Borisovna Davidson

Candidate of Economic Sciences, Associate Professor, Economic Policy and World Economy Department, Graduate School of Economics and Management, Ural Federal University named after the first President of Russia B.N. Yeltsin, Yekaterinburg, Russia (620002, Yekaterinburg, Mira street, 19); ORCID orcid.org/0000-0002-6779-9561 e-mail: n.b.davidson@urfu.ru

Marina Dmitrievna Somina

B.A. in Economics, Graduate School of Economics and Management, Ural Federal University named after the first President of Russia B.N. Yeltsin, Yekaterinburg, Russia (620002, Yekaterinburg, Mira street, 19); ORCID orcid.org/0009-0002-6017-9594 email: marina.dmtr.s@gmail.com

Oleg Svyatoslavovitch Mariev

Candidate of Economic Sciences, Research Fellow, Graduate School of Economics and Management, Ural Federal University named after the first President of Russia B.N. Yeltsin, Yekaterinburg, Russia (620002, Yekaterinburg, Mira street, 19); ORCID orcid.org/0000-0002-9745-8434 e-mail: o.s.mariev@urfu.ru

For citation

Davidson, N.B., Somina, M.D., Mariev, O.S. (2025). The Impact of Income Inequality on Renewable Energy Consumption in Countries with Different Economic Development Levels. Journal of Applied Economic Research, Vol. 24, No. 4, 1140-1164. https://doi.org/10.15826/vestnik.2025.24.4.037

Article info

Received August 21, 2025; Revised October 6, 2025; Accepted October 10, 2025.

DOI: https://doi.org/10.15826/vestnik.2025.24.4.037

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