Human Capital, Income Inequality and Energy Demand Nexus in sub-Sahara Africa: Insights from Asymmetric Approach

The existing literature on the human capital-energy consumption nexus typically assumes that human capital symmetrically affects energy consumption without considering the potential asymmetric connections between the variables. This study empirically investigates the asymmetric nexus between human capital, income inequality, and energy consumption in selected sub-Saharan Africa (SSA) countries covering the period 1980–2015. The nonlinear panel autoregressive distributed lag (NPARDL) model and the Hatemi-J (2012) asymmetric panel causality test are utilized for this investigation. Using both human capital indicators, our empirical findings indicate that improvement in educational human capital contributes to efficient utilization of energy sources and thus reduces energy consumption, while an increase in health human capital amplifies energy consumption in the analyzed countries. The findings also show that deterioration in income inequality worsens access to energy sources and thus reduces energy consumption among households. Furthermore, the asymmetric causality test results indicate bidirectional causality for both positive shocks in human capital indicators and energy consumption and vice versa. Based on the outcomes of the findings, the policy implications are discussed.