Does human capital matter for energy consumption in China?

- We investigate the impact of human capital on energy consumption in China.
- We consider cross-sectional dependence and parameter heterogeneity.
- Post-school human-capital accumulation improves energy conservation.
- Heterogeneous human capital-energy consumption relationships across provinces.

This article investigates the dynamic relationship between human capital and energy consumption using Chinese provincial data over the period 1990-2010. Considering for cross-sectional dependence and parameter heterogeneity across space and over time, we identify a significant and negative human capital-energy consumption relationship in China. Specifically, we find that a 1% increase in human capital reduces energy consumption by a range between 0.18% and 0.45%. Furthermore, this negative relationship can be attributed to stronger accumulation of post-school human capital in eastern China. This finding suggests that energy conservation in China could be achieved by improving post-school human-capital components such as on-the-job training, experience and learning-by-doing.