Title: Climate change and social inequality
Authors: Tatjana Dahlhaus - Bank of Canada (Canada) [presenting]
Abstract: The effects of climate change on inequality are assessed. First, we model climate change as shifts in the whole distribution of weather variables (e.g., temperatures). In doing so, we calculate time series of, for example, mean, variance, max-min, interquantile range, skewness, kurtosis, Value at Risk (VaR), Quantiles, etc. Next, we proceed by describing the time series pattern in these series, such as the presence of trends. Finally, the paper builds an empirical structural model to model economic variables and climate change endogenously. Specifically, we introduce a functional VAR and define climate change as a shock that permanently shifts the time-varying distribution of weather variables. Potential economic variables of interest include GDP, but also social inequality. We focus on inequality and study the distributional effects of climate change on income and wealth within the US. Inequality has been a persistent issue in the climate change discussion with a focus on inequality across countries. Nevertheless, within-country inequality has not received much attention, and we aim to provide first insights into the effects of climate change on income inequality within a country.