DDP 701. Nazrul Islam, Jeffrey Vincent, and Theodore Panayotou. "Unveiling the Income-Environment Relationship: An Exploration into the Determinants of Environmental Quality." May 1999. 40 pp.

This paper decomposes the reduced form income-environment relationship into its structural sources. It identifies a level effect, a composition effect, and an abatement effect. This decomposition is implemented using global data on suspended particulate matter in the air. The level and composition effects are found to conform to their a priori expected linear and quadratic forms, respectively. The abatement effect is found to be generally downward sloping, though not exactly conforming to the expected inverted-J shape.

Keywords: environmental Kuznets curve, air pollution

JEL codes: O0, Q0, Z0

Nazrul Islam is an Assistant Professor in the Department of Economics at Emory University.

Jeffrey R. Vincent is a Fellow of the Institute at the Harvard Institute for International Development (HIID). His research interests include forest economics, national accounts and the environment, and environmental policy issues in transition economies.

Theodore Panayotou is a Fellow of the Institute at the Harvard Institute for International Development (HIID), Director of HIID's International Environment Program; Project Director for Central and Eastern Europe, Environmental Economics and Policy Project; and Lecturer on Economics, Harvard University. His research interests include natural resource economics (forestry, land and water, fisheries, energy, minerals and environment), agricultural economics, development economics, capital theory and growth, optimal control and duality theory, social welfare economics and policy analysis.