We examine the relationship between human capital and energy consumption in the United Kingdom employing time series data dating back to the beginning of the sixteenth century. We first employ traditional parametric methods to examine the long-run effects. We find a negative relationship between total human capital and energy consumption in the long run, with an additional year of schooling reducing energy consumption in the range 4–9%, depending on the identification method. Given that such a long time series contains non-linearities and structural shifts in the data, we investigate the non-linear properties and find a long-run relationship between human capital and energy consumption. We also relax the functional form assumptions and utilise local linear non-parametric regression. The results show a time-varying non-parametric link between human capital and energy consumption, although, consistent with the linear long-run estimates, the relationship is negative.
- Energy consumption
- Human capital