Fossil energy in economic growth: A study of the energy direction of technical change, 1950-2012
SPRU Working Paper Series from SPRU - Science Policy Research Unit, University of Sussex Business School
Climate change mitigation challenges national economies to increase productivity while reducing fossil energy consumption. Fossil energy-saving technical change has been as- sumed to accomplish this, yet empirical evidence is scarce. This paper investigates the long-run relationship between the rate and direction of technical change with respect to fossil energy and labor in the world economy. Growth rates of labor productivity and the fossil energy-labor ratio are examined for more than 95% of world output be- tween 1950 and 2012. The average elasticity of the energy-labor ratio with respect to labor productivity is close to one, implying highly energy-using technical change, but no trade-o between factor productivity growth rates. This stylized fact suggests the importance of a cheap, abundant energy supply for robust global growth, and a more important role for renewable energy. Integrated assessment models do not incorporate this restriction which may result in poorly speci ed baseline scenarios.
Keywords: labor productivity; fossil energy productivity; energy-using technical change; decoupling; long-run trends; stylized fact (search for similar items in EconPapers)
JEL-codes: N10 O44 O47 Q43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-ene, nep-env and nep-gro
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Persistent link: https://EconPapers.repec.org/RePEc:sru:ssewps:2016-11
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