Can labor productivity growth reduce carbon emission? Evidence from OECD countries and China

Abstract

PurposeThe purpose of this study is to examine the challenges involved in the trade-offs of labor productivity and per capita carbon dioxide (CO2) emission.Design/methodology/approachIn this research, we used a balanced dataset of 36 OECD countries and China between 1990 and 2018. We examined the relationship between labor productivity and per capita CO2 emission for OECD countries and China based on an Environmental Kuznets Curve (EKC) hypothesis. Further, the fixed effects model of estimation was employed to examine the impact of variables during the sample period and explore the relationship between predictor and outcome variables within an entity while controlling for all time-invariant differences.FindingsThis study confirmed the existence of the N-shape EKC hypothesis in 36 OECD countries and China. This implies that at the initial development stage, per capita CO2 emission increased with labor productivity; however, after reaching certain threshold, per capita CO2 emission began to fall with rising labor productivity. Then the per capita CO2 emission rises again when labor productivity continually increases.Originality/valueIn this study, we explored the dynamic association between labor productivity and per capita CO2 emissions for 36 OECD countries and China under the EKC framework from 1990 to 2018 by using the labor productivity and per capita CO2 emission as economic and environmental indicators of one country respectively. This study’s contribution showed the following: first, the empirical findings confirmed the N-shape relationship between labor productivity and per capita CO2 emissions for 36 OECD countries and China; second, the findings demonstrated that the association among the underlying variables by testing through the fixed effect model.

The Role of Labor Productivity in Reducing Carbon Emission Utilizing the Method of Moments Quantile Regression: Evidence from Top 40 Emitter Countries

“…The results of the fixed effect regression support the argument that economic growth significantly affected and enhanced emissions of CO 2 . In addition, the study in contrast to Chen et al (2022) found no link or support for the EKC hypothesis.…”

“…Following the works of Chen et al (2022), we use labor productivity as a proxy of economic activity instead of the widely used per capita GDP. The widely used indicate i.e.…”

The role of foreign direct investments, urbanization, productivity, and energy consumption in Finland’s carbon emissions: an ARDL approach

“…The effects of labor productivity on CO 2 emissions have been less extensively studied. Fitzgerald et al ( 2018 ) and Chen et al ( 2021 ) study the trade-off of CO 2 emissions per capita and labor productivity based on EKC hypothesis and a fixed effects model in 36 OECD countries and China during the period 1990–2018. Their results confirm the N-shaped EKC suggesting that at the early development stage, CO 2 emissions increase with labor productivity (positive relation), and after a certain threshold, CO 2 emissions decrease with rising labor productivity (negative relation), and later, the CO 2 emissions return to increasing trend with higher labor productivity.…”

Impact of renewable energy technology innovation on green industrial structure upgrading: evidence from 284 cities in China

“…As one of the major emerging countries (Lin and Wang 2020), China has witnessed remarkable economic expansion in the past few decades (Chen and Zheng 2023). However, this growth has also been accompanied by significant environmental challenges (Su and Fan 2022), such as rapid resource depletion and severe environmental pollution (Chen et al 2022). China has established goals for green development to address these issues and tackle global environmental challenges like climate change (Zhu et al 2019).…”