Interconnected roles of human capital, employment, and sustainable development in the EU countries

Abstract

Ensuring social stability and environmental sustainability is crucial for implementing the Sustainable Development Goals in European Union (EU) countries. This paper aims to explore the interdependencies among human capital, employment, and resource productivity in these countries, focusing on sustainable development. To comprehensively assess factors influencing sustainable development in the EU countries, the simultaneous model is proposed. The simultaneous equations were derived using a two-step least squares method. The model comprises three endogenous variables (human capital, quantified by students enrolled in tertiary education; employment, in terms of the resident population concept; and resource productivity) and ten exogenous variables. The human capital pillar for the EU countries hinges on public funding for tertiary education, the employment dynamics for tertiary-educated individuals, resource productivity, environmental taxation, and emigration. Employment requires monitoring demographic trends, resource productivity, government funding for tertiary education, and environmental taxation. The environmental pillar depends on employment dynamics, GDP per capita, public funding for environmental protection, material resource extraction, and direct material inputs of fossil energy materials. For Austria, Belgium, and Portugal, from 2013 to 2021, the theoretical values based on the structural model of sustainable development demonstrated good forecast accuracy for human capital, employment, and resource productivity, indicating positive dynamics.