A semi-parametric panel data analysis on the urbanization-carbon emissions nexus for OECD countries

This study takes a fresh look at the presence of an urbanization-carbon emissions Environmental Kuznets Curve for a panel of the Organization for Economic Co-operation and Development (OECD) countries from 1960 to 2010 using a recently developed semi-parametric panel fixed effects regression model. Through incorporating a quadratic term for the urbanization variable into the Stochastic Impacts by Regression on Population, Affluence and Technology model, our analysis represents one of the first OECD studies aimed at determining the effect of urbanization on carbon emissions and identifying the relationship between these two variables. Compared with parametric panel fixed effects regression, more robust results from the recently developed method revealed that energy intensity and per capita GDP had clear effects on per capita carbon emissions. Urbanization also significantly contributed to changes in per capita carbon emissions. We also found strong evidence for an inverse U-shaped curve relationship between urbanization and carbon emissions, verifying the Environmental Kuznets Curve hypothesis. These findings advance the emerging consensus on the urbanization-carbon emissions nexus. Also, the novel model used, combined with our estimation method, can be readily extended to cover other regions for investigating the relationship between development and environmental pollution.