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

Abstract

Purpose

The 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/approach

In 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.

Findings

This 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/value

In 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.

Citation

Chen, X., Ma, W. and Valdmanis, V. (2022), "Can labor productivity growth reduce carbon emission? Evidence from OECD countries and China", Management of Environmental Quality, Vol. 33 No. 3, pp. 644-656. https://doi.org/10.1108/MEQ-10-2021-0240