A macroeconometric analysis of the distributive impacts of the climate crisis in Italy

Recent literature highlights the dual challenge of climate change and rising within-country inequalities. Studies indicate that climate change exacerbates income disparities, however macroeconometric approaches have been barely used to analyze these effects.
This study employs a macroeconometric approach to analyze the distributive effects of climate change in Italy. Using a Vector Autoregression (SVAR) model, we estimate the impact of climate shocks—captured through Wet Bulb Globe Temperature (WBGT)—on income distribution. The model incorporates key economic variables such as GDP, labour productivity, labour supply, alongside inequality measures from the World Inequality Database. Structural shocks are identified using spectral analysis such that the shocks explain the variance of climate change over a long frequency scale.
By integrating WBGT—an advanced heat stress indicator—into a macroeconometric framework, this research provides a novel assessment of climate change’s role in economic inequality.