Effect of economic development, income inequality, transportation, and environmental expenditures on transport emissions: evidence from OECD countries

Abstract

Abstract Environmental quality has been pondered as an essential aspect of sustainable development across the global economies. Several factors such as economic development, income inequality, transportation, and environmental expenditures drastically influence environmental quality. More specifically, the transport sector is a major contributor to carbon emissions which deteriorate the environmental quality. Therefore, this study investigates whether economic development, transportation, environmental expenditures, and income inequality affect transport-carbon emissions for the OECD countries. Furthermore, panel time-series data period from 2000 to 2020 and cross-sectional autoregressive distributed lag method are used for transport-oriented environmental examination. Results demonstrate that transportation upsurges transport-carbon emission level by 46.45% on average. Moreover, the joint effect of economic development and environmental taxes significantly reduces transport-carbon emissions by 14.70%. Findings further suggest that an inverted U-shaped relationship exists between economic development and transport emission. Besides, income inequality, environmental expenditures, and green transportation are negatively associated with the coefficient of transport-carbon emissions. More interestingly, income inequality is negatively correlated with transport-carbon emissions across the sample countries. Furthermore, the joint effect of income inequality and economic development increases the emission level released by the transport sector. Thus, this research recommends some policies: countries should control traffic movements and increase environmental expenditures, and produce green transport vehicles to tackle environmental issues.