The Interaction of Human Capital and Carbon Emission with Diminishing Economic Growth

Abstract

This paper investigates the relationships between carbon emissions, health outcomes, and economic growth. It has been argued that carbon emissions negatively affect health outcomes, which influences the aggregate productivity of countries. A general equilibrium model is constructed, with health and educational outcomes presented as inputs of human capital. The empirical part assesses the impact of health on economic development using carbon emissions and employs the IV model (2SLS) to avoid potential endogeneity. The analysis uses the data of 178 worldwide countries from 2010 to 2016. The findings suggest substantial effects of health as an input of human capital on per capita income. The results form the basis of important policy recommendations for policy- and decision-makers to increase the stock of human capital and sustainable economic growth.