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Human capital and energy consumption: Evidence from OECD countries

Yao Yao, Kris Ivanovski, John Inekwe () and Russell Smyth ()

Energy Economics, 2019, vol. 84, issue C

Abstract: We examine the effect of human capital on energy consumption for a panel of OECD economies over the period 1965–2014. Our preferred results, which account for cross-sectional dependence and structural breaks, suggest that a one standard deviation increase in human capital reduces aggregate energy consumption by 15.36%. When we distinguish between clean and dirty energy consumption, we find that human capital generates significant positive externalities for the environment. Specifically, we find that a one standard deviation increase in human capital is associated with a 17.33% decrease in dirty energy consumption and an 85.54% increase in clean energy consumption. Our findings reinforce the social benefits of investing in human capital and suggest a promising avenue for energy conservation without impeding economic growth.

Keywords: Human capital; Energy consumption; Cross-section dependence; Panel data (search for similar items in EconPapers)
JEL-codes: C33 J24 O50 Q43 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.eneco.2019.104534

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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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