Abstract
This paper examine the causal relationship between CO 2 emission, human capital, and economic growth using an autoregressive distributed lag model during a period of 1981–2017. The result showed that CO 2 emission has a negative effect in the long-run and positive effect in the short-run, while human capital has a positive effect in the long-run and negative effect in the short-run on economic growth in Ethiopia. The result of Granger causality showed that a bidirectional causal relationship from reduction of CO2 emission to economic growth, from human capital to economic growth and a unidirectional causal relationship between human capital and reduction of CO2 emission in Ethiopia. However, there is no significant causality from human capital to reduction of CO2 emission. Policymakers should emphasize human capital development and establish policies, strategies, and programs related to the reduction of CO2 emission in Ethiopia. Keywords: CO 2 emission, Human Capital, Economic Growth, ARDL Model, Ethiopia DOI: 10.7176/JETP/10-5-01 Publication date: September 30 th 2020
Highlights
In recent research, the relationship between economic growth and climate change is an important issue
The main purpose of this study is to examine the relationship between human capital, carbon dioxide emission and economic growth
The time-series data of the gross domestic product (GDP), human capital (HC) is proxy on years of schooling and returns to education and CO2 is proxy for carbon dioxide damage which cover the period from 1981 to 2017, based the data availability
Summary
The relationship between economic growth and climate change is an important issue. Climate change is an obstacle to economic growth (Mc Sweeney et al, 2010; Abidoye & Odusola, 2015; Robinson et al, 2013; Stern, 2008). The world economy is facing serious challenges with global climate change. To address this problem, there is international pressure to reduce carbon emissions for all countries. Change in the trend among economic activities, taking into account the environmental values (Costantini & Monni, 2008; Muttarak & Lutz, 2014; Striessnig, Lutz, & Patt, 2013). A change in the production system with technological changes helps to save energy and reduce emissions
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