Does structural labor change affect CO2 emissions? Theoretical and empirical evidence from China

Abstract

Since 2010, a severe lack of migrant workers has occurred in some provinces in China, indicating a sharp decline in labor force transfer in the primary industry during the economic transition. This decline is believed to have resulted in a decrease in carbon emissions. A neoclassical framework was built to estimate the labor force mitigation effect on CO2 emissions theoretically. The specific features of the nexus of CO2 emissions, economic development, and rural-urban transfer were investigated and evaluated within this framework. Two important propositions were derived from the theoretical model. First, the higher the ratio of the labor force working in the non-agricultural sector, the higher the emissions. Second, the speed of labor force transfer from the agricultural to non-agricultural sectors impacts peak emission levels. In the empirical study, data from China's 29 provinces for 1995-2012 were utilized to examine the two propositions. The GMM method was employed to control the possible endogeneity problem and introduce dynamics to the model. The empirical results verified the theoretical propositions. In addition, we concluded that the impact of labor transfer on CO2 emissions is subject to socioeconomic development levels in the long run.