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Unemployment rate, clean energy, and ecological footprint in OECD countries

  • Applied Economics of Energy and Environment in Sustainability
  • Published:
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Abstract

OECD countries have encountered the challenges of improving the environmental sustainability while maintaining economic growth by not impairing employment. This study attempts to reexamine the environmental Kuznets curve (EKC) hypothesis by using ecological footprint as an indicator of environmental degradation. Besides, our study aims to test the validity of environmental Phillips curve (EPC) and role of clean energy on ecological footprint. Our data cover a panel of 36 OECD countries from 1995 to 2015. We adopt the second-generation panel unit root and cointegration test to account for the presence of cross-section dependence (CSD). Moreover, the long-run relationship is estimated using Common Correlated Effect Mean Group (CCEMG) and Augmented Mean Group (AMG) that are robust to CSD. Our findings reveal that the EKC hypothesis is not valid while EPC is confirmed in OECD countries. Though there is a trade-off between unemployment and environmental degradation in OECD countries, the development of new technologies, especially in the clean energy sector, could be a key factor contributing to sustainable growth and better environmental quality. Thus, it is recommended that OECD countries should focus on the development of innovative green technologies and strengthen the initiatives that promote renewable energy consumption.

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Notes

  1. If the ecosystem collapses, its structure and function would diminish and its size and extent would tend to shrink. Most importantly, a collapse in the ecological system may cause more than 50% loss in the global GDP (World Economic Forum, 2021).

  2. Proposed by Kashem and Rahman (2020a, b).

  3. It is because people in rich countries demand for more resources than citizens in the poor countries.

  4. As World Bank does not provide data for alternative and nuclear energy beyond 2015, our data period ends at 2015 to maintain a balanced panel.

  5. Neutrality hypothesis explains that energy conservation and demand management policies aimed at mitigating carbon emissions and energy consumption have no effect on GDP (Ozturk and Acaravci 2010; Payne 2011; Paramati et al. 2017; Ozcan and Ozturk 2019). This results in the decoupling of environmental demands from economic growth, particularly in those OECD countries that rely on agriculture or undergo the transition from agriculture to industry. This is owing to their smaller scale economy, and technological and compositional effects (Dinda 2004).

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Authors and Affiliations

  1. Faculty of Business and Finance, Universiti Tunku Abdul Rahman, Kampar Campus, Kampar, Malaysia

    Cheong-Fatt Ng, Lin-Sea Lau & You-How Go

  2. Faculty of Business, Design and Arts, Swinburne University of Technology, Sarawak Campus, Sarawak, Malaysia

    Kwang-Jing Yii

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  1. Cheong-Fatt Ng
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  2. Kwang-Jing Yii
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  3. Lin-Sea Lau
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Contributions

Cheong-Fatt Ng: data collection, econometric analysis, and result interpretation. Kwang-Jing Yii: data collection, result interpretation, conclusion of the paper, and editing. Lin-Sea Lau: introduction and literature review and editing. You-How Go: literature review, result interpretation and conclusion of the paper. All authors read and approved the final manuscript.

The data set used in this paper is from World Bank. It is available from the corresponding author on reasonable request.

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Correspondence to You-How Go.

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Ng, CF., Yii, KJ., Lau, LS. et al. Unemployment rate, clean energy, and ecological footprint in OECD countries. Environ Sci Pollut Res 30, 42863–42872 (2023). https://doi.org/10.1007/s11356-021-17966-6

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