IDEAS home Printed from https://ideas.repec.org/a/spr/endesu/v25y2023i12d10.1007_s10668-022-02695-8.html
   My bibliography  Save this article

Picturing the future of carbon-dioxide emissions: the role of informal economy

Author

Listed:
  • Caglar Karaduman

    (Anadolu University)

Abstract

The literature on the informal economy and environmental quality nexus is quite thin despite that the considerable size of the informal economy is capable of creating significant effects on the environmental quality, since the firms in the informal part of an economy are not subject to regulations. This study aims to investigate the aforementioned nexus on the global scale using a large panel of 138 countries for the 1990–2018 period. By utilizing Augmented mean-group estimation technique and bootstrap Granger non-causality approach, it is shown that the size of the informal economy is negatively associated with and causally linked to carbon-dioxide (CO2) emissions, globally. In addition, GDP per-capita, population and government consumption are found to be in highly significant positive relation with the emissions, whereas no significant effect is captured from globalization and capital stock. The marginal analysis for the informal sector size and CO2 emissions nexus shows that the relation gains momentum as the informal sector shrinks, particularly below 20% of GDP. Thereby, it is concluded that the countries with an informal sector that allocates a larger part of the economy are suffering from severe underproductivity. It is also argued, based on the marginal analysis, that if the size of the informal economy continues to shrink globally and policymakers do not take the necessary actions, CO2 emissions might hike sharply in the future.

Suggested Citation

  • Caglar Karaduman, 2023. "Picturing the future of carbon-dioxide emissions: the role of informal economy," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(12), pages 14913-14925, December.
    • Handle: RePEc:spr:endesu:v:25:y:2023:i:12:d:10.1007_s10668-022-02695-8
    DOI: 10.1007/s10668-022-02695-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10668-022-02695-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10668-022-02695-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Elgin, Ceyhun & Oztunali, Oguz, 2014. "Pollution and informal economy," Economic Systems, Elsevier, vol. 38(3), pages 333-349.
    2. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    3. Ummad Mazhar & Ceyhun Elgin, 2013. "Environmental Regulation, Pollution and the Informal Economy," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 9, pages 62-81.
    4. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    5. Blomquist, Johan & Westerlund, Joakim, 2013. "Testing slope homogeneity in large panels with serial correlation," Economics Letters, Elsevier, vol. 121(3), pages 374-378.
    6. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, July.
    7. Jinhua Shao & Brayan Tillaguango & Rafael Alvarado & Santiago Ochoa-Moreno & Johanna Alvarado-Espejo, 2021. "Environmental Impact of the Shadow Economy, Globalisation, Trade and Market Size: Evidence Using Linear and Non-Linear Methods," Sustainability, MDPI, vol. 13(12), pages 1-20, June.
    8. Wang, Huiqing & Wei, Weixian, 2020. "Coordinating technological progress and environmental regulation in CO2 mitigation: The optimal levels for OECD countries & emerging economies," Energy Economics, Elsevier, vol. 87(C).
    9. Steve Bond & Asli Leblebicioglu & Fabio Schiantarelli, 2010. "Capital accumulation and growth: a new look at the empirical evidence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(7), pages 1073-1099, November/.
    10. Lan Khanh Chu, 2022. "The impact of informal economy on technological innovation–ecological footprint nexus in OECD countries: new evidence from panel quantile regression," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 12(3), pages 515-533, September.
    11. Bali Swain, Ranjula & Kambhampati, Uma S. & Karimu, Amin, 2020. "Regulation, governance and the role of the informal sector in influencing environmental quality?," Ecological Economics, Elsevier, vol. 173(C).
    12. Cong Minh Huynh, 2020. "Shadow economy and air pollution in developing Asia: what is the role of fiscal policy?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(3), pages 357-381, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alvarado, Rafael & Tillaguango, Brayan & Murshed, Muntasir & Ochoa-Moreno, Santiago & Rehman, Abdul & Işık, Cem & Alvarado-Espejo, Johana, 2022. "Impact of the informal economy on the ecological footprint: The role of urban concentration and globalization," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 750-767.
    2. Jinhua Shao & Brayan Tillaguango & Rafael Alvarado & Santiago Ochoa-Moreno & Johanna Alvarado-Espejo, 2021. "Environmental Impact of the Shadow Economy, Globalisation, Trade and Market Size: Evidence Using Linear and Non-Linear Methods," Sustainability, MDPI, vol. 13(12), pages 1-20, June.
    3. Tiwari, Sunil & Mentel, Grzegorz & Si Mohammed, Kamel & Rehman, Mohd Ziaur & Lewandowska, Anna, 2024. "Unveiling the role of natural resources, energy transition and environmental policy stringency for sustainable environmental development: Evidence from BRIC +1," Resources Policy, Elsevier, vol. 96(C).
    4. Hind Alofaysan, 2024. "Discovering the E-Government and COVID-19 Effect on Sustainable Development: Novel Findings from the China Provinces," Sustainability, MDPI, vol. 16(13), pages 1-15, June.
    5. Xiao, Anran & Xu, Zeshui & Skare, Marinko & Xiao, JingLin & Qin, Yong, 2024. "Unlocking the potential of FinTech: A pathway to sustainable resource management in the EU," Resources Policy, Elsevier, vol. 98(C).
    6. Robert Becker Pickson & Elliot Boateng & Peng Gui & Ai Chen, 2024. "The impacts of climatic conditions on cereal production: implications for food security in Africa," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(7), pages 18333-18360, July.
    7. Soto, Gonzalo H & Martinez-Cobas, Xavier, 2024. "Green energy policies and energy poverty in Europe: Assessing low carbon dependency and energy productivity," Energy Economics, Elsevier, vol. 136(C).
    8. Lan Khanh Chu, 2022. "The impact of informal economy on technological innovation–ecological footprint nexus in OECD countries: new evidence from panel quantile regression," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 12(3), pages 515-533, September.
    9. Abbas, Shujaat & Saqib, Najia & Mohammed, Kamel Si & Sahore, Nidhi & Shahzad, Umer, 2024. "Pathways towards carbon neutrality in low carbon cities: The role of green patents, R&D and energy use for carbon emissions," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    10. Anran Xiao & Zeshui Xu & Marinko Skare & Yong Qin & Xinxin Wang, 2024. "Bridging the digital divide: the impact of technological innovation on income inequality and human interactions," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-18, December.
    11. Hussein Moghaddam & Robert M. Kunst, 2023. "The Role of Natural Gas in Mitigating Greenhouse Gas Emissions: The Environmental Kuznets Curve Hypothesis for Major Gas-Producing Countries," Sustainability, MDPI, vol. 15(5), pages 1-20, February.
    12. Fahd Boundi-Chraki & Ignacio Perrotini-Hernández, 2024. "Revisiting the Classical Theory of Investment: An Empirical Assessment from the European Union," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 22(1), pages 63-89, March.
    13. James Temitope Dada & Folorunsho Monsur Ajide & Adams Adeiza, 2022. "Shadow Economy and Environmental Pollution in West African Countries: The Role of Institutions," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 14(3), pages 366-389, September.
    14. Tao Tang & Lizeth Cuesta & Brayan Tillaguango & Rafael Alvarado & Abdul Rehman & Diana Bravo-Benavides & Natalia Zárate, 2022. "Causal Link between Technological Innovation and Inequality Moderated by Public Spending, Manufacturing, Agricultural Employment, and Export Diversification," Sustainability, MDPI, vol. 14(14), pages 1-25, July.
    15. Muhammad Shahbaz & Syed Jawad Hussain Shahzad & Mantu Kumar Mahalik & Perry Sadorsky, 2018. "How strong is the causal relationship between globalization and energy consumption in developed economies? A country-specific time-series and panel analysis," Applied Economics, Taylor & Francis Journals, vol. 50(13), pages 1479-1494, March.
    16. Dierk Herzer, 2024. "A panel data analysis of the long-run effect of environmental taxes on R&D expenditures at the macro-level," Economics Bulletin, AccessEcon, vol. 44(3), pages 1169-1180.
    17. Chen, Liang & Guo, Yirong, 2023. "The drivers of sustainable development: Natural resources extraction and education for low-middle- and high-income countries," Resources Policy, Elsevier, vol. 86(PB).
    18. Li, Xuelin & Yang, Lin, 2023. "Natural resources, remittances and carbon emissions: A Dutch Disease perspective with remittances for South Asia," Resources Policy, Elsevier, vol. 85(PB).
    19. Aladejare, Samson Adeniyi, 2023. "Economic prosperity, asymmetric natural resource income, and ecological demands in resource-reliant economies," Resources Policy, Elsevier, vol. 82(C).
    20. Wang, Xiang & Yin, Jian & Yang, Yao & Muda, Iskandar & Abduvaxitovna, Shamansurova Zilola & AlWadi, Belal Mahmoud & Castillo-Picon, Jorge & Abdul-Samad, Zulkiflee, 2023. "Relationship between the resource curse, Forest management and sustainable development and the importance of R&D Projects," Resources Policy, Elsevier, vol. 85(PA).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:endesu:v:25:y:2023:i:12:d:10.1007_s10668-022-02695-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.