Measuring the asymmetric effect of corruption on environmental degradation in Pakistan: role of human capital

The paper investigates the effect of corruption and human capital on environmental degradation, measured by CO2 and SO2 emissions, in Pakistan from 1980 to 2020. The indirect (moderating) effect of human capital on environmental degradation is also examined via the interactive term of corruption and human capital. The Bound-testing approach to Autoregressive Distributed Lag Model and Non-Liner ARDL are employed for measuring linear and asymmetric effect of corruption on environmental degradation, respectively. The findings suggest that corruption tends to increase environmental degradation while the effect tends to decline with growing human capital. The study also verifies the existence of Environment Kuznets Curve hypothesis for Pakistan. Additionally, the marginal effect of corruption on carbon emissions shows a tendency to decline significantly, at successively higher percentiles of human capital and offers a mitigation of about 6 to 13%. Furthermore, the study provides an asymmetric effect of corruption on CO2 emission, via positive and negative shocks, both in the short and long run. The findings call in question the corruption dynamics of environmental degradation and urges to control the corruption with stern accountability of the committers to avoid further depletion of environment. The study suggests enhancing the role of human capital to deal with both menace effectively.