The Role of Education and Income Inequality on Environmental Quality: A Panel Data Analysis of the EKC Hypothesis on OECD Countries

Abstract

This study examines the impact of education on the pollution–income relationship, controlling for income inequality in 17 European OECD countries over the period 1950–2015. We developed a novel two-stage algorithm, whose first step consists in applying clustering techniques to group countries according to the income inequality temporal pattern. In the second step, we estimate the educational-mitigated EKC hypothesis (Educational EKC) by employing panel regression techniques accounting for endogeneity issues. The clustering findings suggest the existence of high variability in income inequality levels across countries and heterogeneous development patterns. Empirical estimates highlight that, for high income inequality countries, the Educational EKC hypothesis holds, and that the emissions–income elasticity appears to decline when including the schooling level. In the low income inequality cluster, these effects are not clear-cut. For these countries, we propose a different specification of the EKC, which substitutes the income per capita term with the years of schooling. The new specification is statistically validated for both high income inequality and low income inequality countries. In conclusion, we can state that education should be addressed as a crucial cornerstone to shaping the EKC curve.

Does Human Capital Matter for China’s Green Growth?—Examination Based on Econometric Model and Machine Learning Methods

“…It proposes two transmission paths of green innovation and industrial upgrading. This work directly proves that there is a U-shaped relationship between human capital and green growth, which enriches and expands the research results of nonlinear relations between them [ 35 , 36 , 37 ]. This means that the linear relationship assumptions between human capital and green growth, i.e., the promotion or inhibition viewpoints, are not suitable for China.…”

“…Human capital increases carbon emissions in both low regimes of financial development and human capital, and decreases in high regimes. In addition, some studies believe that human capital has a significant threshold effect on the green economy, resulting in nonlinear effect under different levels of complex variables of economic and social development [ 35 , 36 , 37 ]. Liu and Lv [ 36 ] test the non-linear relationship between rural human capital and agricultural green total factor productivity (AGTFP) in China.…”

“…Liu and Lv [ 36 ] test the non-linear relationship between rural human capital and agricultural green total factor productivity (AGTFP) in China. Maranzano et al [ 37 ] test the nonlinear relationship between education and emissions, reflecting the dynamic change in OECD and European economic and social development. Chen et al [ 35 ] believe that green R&D activities and sulfur dioxide emissions are in a nonlinear relationship, but are affected by technology absorption capacity.…”

“…Other literature believes that the relationship between human capital and green growth is uncertain, changing with different time periods, different industries, macroeconomic variables and human capital regime level in various regions [ 32 , 33 , 34 ]. A few studies confirm the possible non-linear relationship between human capital and green growth [ 35 , 36 , 37 ]. In existing studies on the nonlinear relationship, both the measurement index and nonlinear shape of green growth and human capital are quite different.…”

“…Second, this study uses an econometric model and machine learning (ML) algorithms to test theoretical hypotheses, which not only clarifies the transmission mechanism of human capital affecting green growth, but also introduces advanced ML algorithms into economics field to study human capital’s contribution to green growth. However, existing studies on nonlinear relationship [ 35 , 36 , 37 ] only use econometric models for empirical research, which cannot accurately reflect human capital’s contribution to green growth. Third, this study conducts a series of grouping heterogeneity tests based on the city’s location and size, respectively, and uses the U test econometric model to examine whether the human capital development level in different groups exceeds the U-shaped threshold.…”