Exploring the time-varying asymmetric effects of environmental regulation policies and human capital on sustainable development efficiency: A province level evidence from China

The Sustainable Development Goals (SDGs) for 2022 progress report indicates that global policies to reach SDGs 7 and 8 might not be as good as they could be. In the recent discussions at COP27 and in academic literature, sustainable development efficiency has also been brought up as a way to close this gap. Achieving sustainable development efficiency necessitates a favorable policy environment within economies. Environmental policies, human capital, and broader policy dimensions are just a few of the factors that influence this environment. The existing policy discourse and academic literature suggest that environmental regulation policies, human capital development, industrialization, urbanization, and GDP are potential drivers to achieve sustainable development efficiency. Hence, the study tends to erect a policy framework by investigating the time-varying effects of environmental regulation policies and human capital on sustainable development efficiency with the consort of industrialization and urbanization in a large economy-China. To this end, the study deploys the province-level panel data from 1998 to 2017 and utilizes several advanced econometric methods (Non-Parametric Panel Data Model, Wavelet Quantile Correlation, and Non-Parametric Panel Granger Causality Test). The results suggest that positive shocks in environmental regulation policies and human capital have favorable effects on sustainable development efficiency; however, their negative shocks have adverse impacts over time. Further, industrialization and urbanization significantly deteriorate the sustainable development efficiency. Based on the results, phase-wise policies are recommended in order to achieve SDGs 7 and 8.