How nonfarm employment drives the households’ energy transition: Evidence from rural China

Amid the rapid increase of energy consumption, the air pollution and related health problems caused by traditional energy consumption have become increasingly severe in rural areas, and it is now urgent to expand clean energy consumption and achieve energy upgrades. Nonfarm employment can significantly raise rural residents’ incomes, which can then affect the available energy consumption choices. However, whether nonfarm employment can promote the transition of energy consumption and its potential influencing mechanisms must be further studied. Based on 2018 survey data on energy consumption in rural China, a cross-sectional regression method with instrumental variables is used to explore the effect of nonfarm employment on energy consumption. The results demonstrate that nonfarm employment has a significantly positive impact on energy efficiency and effective energy consumption per capita, but no significant impact is found on total energy consumption per capita. Specifically, nonfarm employment increases electricity, natural gas, and liquefied petroleum gas consumption, and reduces coal and biomass energy consumption. Nonfarm employment can affect household energy consumption in rural areas through income, demonstration, and labor effects. Income effect indicates that when nonfarm income increases by 1%, energy efficiency significantly increases by 0.108%, and effective energy consumption per capita significantly increases by 0.074%. Demonstration effect indicates that nonfarm employment outside the county significantly improves energy efficiency. Labor effect indicating that the threshold values of nonfarm employment time on energy efficiency and effective energy consumption are 10.278 standard working months and 11.367 standard working months. The research shows that nonfarm employment plays an important role in the clean and efficient transformation of energy in rural areas.