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Is There an Extended Education-Based Environmental Kuznets Curve? An Analysis of U.S. States

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Abstract

This is the first paper to use U.S. state-level data to econometrically assess education’s role in an environmental Kuznets curve setting. The empirical analysis involves testing several models to evaluate the impact of education on carbon dioxide (CO2) emissions and energy consumption and determine the shape of their interrelationships. We employ recent econometric approaches that deal with the bias arising in panel datasets due to cross-section dependence. Our findings indicate that education attainment contributes significantly and positively towards environmental improvements. Granger causality tests reveal that CO2 discharges and energy usage are caused by education. Furthermore, education exhibits a U-shaped relationship with energy consumption and carbon emissions, providing evidence that education can improve environmental quality in the long term.

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Notes

  1. Even though the EKC hypothesis was tested successfully in many cases, there are important caveats which do not allow to wait for emissions to decline once certain level of income or education is reached. Kuznets’s (1955) paper has been treated as both having theoretical importance and empirical support for the inverted-U hypothesis (Fields 1980). His work was interpreted as an empirical work mainly due to the fact that he used numerical examples rather than algebra to develop his theory, something that made his arguments accessible to wider audiences. Fogel (1987) highlights the fact that Kuznets repeatedly warned about the fragility of the data that suggested his theory. Kuznets explained that even if the empirical findings prove to be valid, they belong to a limited period of time and cannot be generalized, so extreme caution must be taken when interpreting results drawn from his theory. Nevertheless, Kuznets’s caveats were not taken into account and his hypothesis was raised to the level of law despite its shortcomings.

  2. The shape of the Kuznets curve will not necessarily be confirmed if we consider CO2 at the global scale as it is hard to achieve a global net pollution reduction (Suri and Chapman 1998).

  3. We would like to acknowledge the fact that CO2 emission is a public good. Unlike "conventional" pollutants such as sulfur dioxide (SO2), nitrogen oxides (NOX), volatile organic compounds (VOCs), and particulate matter (PM), CO2 does not affect human health directly. Rather, it affects it through climate change effects.

  4. https://www.eia.gov/

  5. https://www.bea.gov/data/income-saving/personal-income-by-state

  6. The NCES educational attainment proxies suffer from discontinuity of the time series in each state (cross-section). The gaps in the time series as well as the lower number of observations preclude the implementation of the aforementioned econometric methods. We extrapolated the data to fill in the gaps in order to conduct the robustness checks.

  7. The short time series (18 observations) for each cross-section, in contrast to the number of regressors in models (1–4), does not permit to conduct unit-root and cointegration analysis that account for common correlation.

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Acknowledgement

We would like to thank the Editor Tomasz Zylicz and two anonymous referees for helpful comments and suggestions. All errors remain our own.

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Shafiullah, M., Papavassiliou, V.G. & Shahbaz, M. Is There an Extended Education-Based Environmental Kuznets Curve? An Analysis of U.S. States. Environ Resource Econ 80, 795–819 (2021). https://doi.org/10.1007/s10640-021-00610-9

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