Population ageing, income growth and CO₂ emission: Empirical evidence from high income OECD countries

Abstract

Purpose

The purpose of this paper is to attempts to explore the relationship between population ageing, income growth and CO₂ emission in 25 high-income Organization for Economic Cooperation and Development (OECD) countries in the framework of environmental Kuznets curve (EKC).

Design/methodology/approach

Following Zagheni (2011) and using a relatively new cointegration technique and fully modified ordinary least square in a panel data over 1980-2009 the empirical results find evidence of inverted-U shaped EKC in these OECD countries.

Findings

The empirical results demonstrate that per capita CO₂ emission (PCCO₂) increases initially with economic growth; however, after reaching a per capita income level of US$ 24,657 it starts falling. With regard to ageing, the cointegrating vector indicates that a one percent increase in the share of aged population will reduce PCCO₂ by 1.55 percent in the long run.

Originality/value

This is one of the first studies that examine the effect of population ageing on CO₂ emission in a panel setting. The paper consider the cross-sectional dependence and use unit root test suitable for cross-sectional-dependent variables. The paper also examine short-run and long-run dynamics of EKC with panel cointegration and panel error correction methods.

Citation

Hassan, K. and Salim, R. (2015), "Population ageing, income growth and CO₂ emission: Empirical evidence from high income OECD countries", Journal of Economic Studies, Vol. 42 No. 1, pp. 54-67. https://doi.org/10.1108/JES-04-2013-0046