Endogeneity in the Environmental Kuznets Curve: An Instrumental Variables Approach

The effects of increasing income on environmental quality is an issue that has long puzzled economists. For over a decade, economists have theorized that a graph of environmental degradation versus income often looks something approximating an inverted-U shape, dubbed the environmental Kuznets curve (EKC) after Simon Kuznets’ work in the 1950s and 1960s on income equality (Kuznets 1955, 1965)