Abstract
To date, economic growth, development, and employment have been among the priorities of governments. However, as human-induced environmental damage has reached unsustainable levels, neglected environmental factors have been brought into the equation for future policy. The environmental Phillips curve (EPC) is one of the challenging equations that presents governments with a dilemma between unemployment and environmental quality. With this motivation, this is the first time the paper questions the validity of the EPC in Turkiye. Moreover, in contrast to the EPC literature, the paper uses the load capacity factor to focus on environmental quality rather than pollution. In this framework, the empirical model analyses the effect of gross domestic product, unemployment rate, natural resource rents, and primary energy consumption on the environmental quality for 1982–2022. The newly developed Augmented Autoregressive Distributed Lag (A-ARDL) with Fourier term results reveal that (i) the model is cointegrated; (ii) unemployment confirms the validity of EPC by promoting environmental quality; and (iii) gross domestic product, natural resource rents, and primary energy consumption accelerate environmental degradation. The findings indicate that employment and environmental policies cannot be successful simultaneously. To solve this puzzle, efforts should be made towards environmentally friendly forms of production, such as renewable energy sources. These policies can both stimulate employment and improve the environment.
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3: “In line with the 2053 net zero carbon emission target, studies will be carried out to prepare a long-term low-emission development strategy compatible with the development plans.” 4: “Within the scope of the European Green Deal, Sectoral road maps will be prepared for companies on issues such as resource, process and energy efficiency and digitalization. Moreover, awareness-raising activities on European Green Deal will be carried out.” 7: “With Carbon Border Adjustment Mechanism (CBAM) and the 2053 net zero emission target in mind, technologies such as energy storage, hydrogen, and carbon capture and storage that support energy transformation, as well as R&D and innovation activities for the development of microgrid management and digitalization will be supported.” 13: “The effects of the transitioning to a green and circular economy on labor markets will be analyzed, and the competency of the workforce will be increased for the new occupations that will emerge, taking just transition into account.” 20: “With the Renewable Energy Resource Area (RERA-YEKA) model, projects will continue to be developed enforcing prioritization of domestic products.” 27: “Financing opportunities for green transformation will be increased; existing support mechanisms will be reviewed. The institutional capacity on sustainable finance will be improved, and the green finance ecosystem will be developed.” (Presidency of Strategy and Budget, 2023).
4th paragraph: “Special attention will be paid to the opportunities offered by green and digital transformation, with a focus on increasing potential growth rates through the effective and efficient use of Türkiye's financial and natural resources, especially human capital. Türkiye's international competitive position will be strengthened through sustainable, low-emission, high-technology-based production techniques by adopting integrated and environmentally friendly policies especially in the energy, industry, transportation and agriculture sectors.” (Presidency of Strategy and Budget, 2023).
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Yavuz, E., Kilic, E. & Caglar, A.E. A new hypothesis for the unemployment-environment dilemma: is the environmental Phillips curve valid in the framework of load capacity factor in Turkiye?. Environ Dev Sustain (2023). https://doi.org/10.1007/s10668-023-04258-x
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DOI: https://doi.org/10.1007/s10668-023-04258-x