Climate change and within-country inequality: New evidence from a global perspective.

• Temperature and precipitation anomalies are key drivers of within-country inequality. • Agriculture is a fundamental channel in the climate change-inequality nexus. • Warmer temperatures have a stronger impact on income disparities in rural countries. • Urban areas are more exposed to income disparities induced by extreme precipitations. • Inward FDI diversification enhances resilience, moderating climate-induced inequality. This paper investigates the impact of climate change on within-country income inequality for more than 150 nations over the period 2003–2017. Specifically, we control for a large number of determinants of income disparities detected by extant literature and focus on agriculture as one of the most crucial channels in the climate change-inequality nexus. We find that temperature increases and precipitation anomalies have significant adverse effects on within-country inequality, especially in the presence of larger shares of population in rural areas and of workers in agriculture. We also provide evidence on the lower distributional impact of climate change in economies that are more diversified across value chain activities. [ABSTRACT FROM AUTHOR]