The effect of directed technical change on carbon dioxide emissions: evidence from China’s industrial sector at the provincial level

Abstract

Technical change has a pivotal role to play in low-carbon development. Recent research has offered different insights regarding the effect of technical change on CO2 emissions but ignored the bias of technical changes which lead to changes in CO2 emissions. To fill the gap, this paper uses the 2008 to 2015 provincial-level data on China’s 22 industrial sub-sectors to investigate both the effect of directed technical change on CO2 emissions and its heterogeneity. We find that the technical change in most industrial sectors in China was capital-biased, although a labor-biased trend was evident. Labor-biased technical change is conducive to CO2 reduction, while capital-biased technical change has the opposite effect. Moreover, this effect is different by developmental periods, industries, and regions. Therefore, we propose that the government promotes labor-biased technical change based on the differentiated characteristics.