New insights on the contribution of human capital to environmental degradation: Evidence from heterogeneous and cross-correlated countries

Abstract

Averting environmental degradation and reducing dependence on conventional energy products has come to the center stage of policy debate and academic research. Employing data from 19 OECD countries with advanced expenditures in education we examine the effect of human capital on environmental degradation over the period 1980 to 2019. We employ two alternative measures to capture environmental degradation that is energy consumption and CO2 emissions, and account for human capital by focusing on government expenditure on education to offer a better insight into the role of policy making in averting environmental degradation. The results suggest that human capital enhancement is robustly associated with reductions in energy consumption and CO2 emissions. We additionally provide a comprehensive analysis of the human capital- environmental degradation nexus along the conditional distribution by employing the Machado and Santos Silva (2019) estimation method of quantile regressions with fixed effects. It is shown that human capital is affecting energy consumption and CO2 emissions negatively and statistically significantly across the distribution.