Pollution, income inequality and green finance in the new EU member states

Abstract

AbstractIncome inequality and pollution represent major challenges for the New EU Member States. In this context, the main objective of this paper is to check if income inequality enhances pollution in the EU-13 countries in the period 2002–2021. The results depend on the type of method that was employed (Fully Modified Least Square (FMOLS) estimators and method of moments quantile regression). In most of the cases, Gini index and gender pay gap have a negative impact on GHG emissions. An inverse U pattern is supported for the pollution—economic growth nexus. Foreign direct investment contributes to pollution, while renewable energy consumption proved to be the most efficient tool in the fight with pollution. For robustness check, in the period 2006–2021, the environmental protection investments of general government reduced the GHG emissions only in the long run. The results are the basis for the formulations of various proposals to reduce pollution in the New EU Member States.