Modelling the nexus between human capital, income inequality, and energy demand in India: new evidences from asymmetric
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RESEARCH ARTICLE
Modelling the nexus between human capital, income inequality, and energy demand in India: new evidences from asymmetric and non-linear analysis Madhu Sehrawat 1 Received: 6 July 2020 / Accepted: 3 September 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The growth stimulating effect of energy has been long established in economic literature. Consequently, researchers and policy makers are trying to identify socio-economic determinants of energy consumption in both developed and developing countries to conserve energy. In the present study, we attempt to examine the non-linear and asymmetric effect of human capital and income disparity on energy demand in India over the period 1970–2014. The findings propose long-run co-integrating relationship between human capital, income inequality, and energy demand in the presence of asymmetric framework. It is found that increased level of human capital results in energy conservation as it decreases the energy demand, and higher income gap also results in lower energy demand as poor section may have restricted access to energy sources. Finally, the asymmetric causality test results reveal that only positive shock in income inequality tends to cause energy demand. From policy stand point, it can be recommended that government policies should be designed and implemented towards improvements in human capital to achieve sustainable economic growth in India since human capital found to be a significant component in energy conservation. Keywords Human capital . Income inequality . Energy consumption . Non-linear ARDL . Structural break test . India JEL classification C22 . D31 . Q43 . J24
Introduction Indian economy has embraced many structural economic reforms since the adoption of liberalization policies in 1991 and these reforms have been associated with its impressive growth rates (Ahluwalia 2018). Its salient economic performance over recent years has also been accompanied by an increase in energy demand by all the performing sectors; this boost in energy demand has positioned India as the fourth largest energy consumer in the world, trailing only the USA, China, and Russia (source: US Energy Information Administration). Furthermore, as per the Responsible Editor:Nicholas Apergis Independent researcher, Member of American Economic Asssociation (AEA). * Madhu Sehrawat [email protected] 1
American Economic Association, 33 S Boulder Cir, Boulder, CO 80303, USA
US Energy Information Administration (EIA), India has the fastest growing rate of energy consumption globally through 2050 (International Energy Outlook 2019). This huge energy demand has been identified as a prime reason for emission of CO2 (Srivastava 1997; Tiwari 2011; Nain et al. 2017; Pandey and Rastogi 2019). With respect to this growing energy demand, CO2 emissions will also roughly double up by 2040 (source: BP Energy Outlook 2019). Therefore, determining the factors effecting the energy consumption is very critical to achieve sustainable economic growth withou
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