The effect of shadow economy, life expectancy, education, and income on CO2 emissions: an analysis of BRICS countries

Environmental impairment has become one of the leading global concerns since the 1950s, and the drivers of increasing global CO 2 emissions have begun to be explored extensively. This study investigates the short and long term effects of the shadow economy, life expectancy, education, and income on CO 2 emissions in the BRICS countries during the 1993–2020 period, accounting for cross-sectional dependence and heterogeneity using second-generation cointegration tests, the augmented mean group (AMG) estimator, and causality tests. The results of the causality test reveal a unidirectional causality from the shadow economy, education, and income to CO 2 emissions and a bidirectional causal nexus between life expectancy and CO 2 emissions. The results of the AMG estimation show that the shadow economy, life expectancy, and income positively affect CO 2 emissions in BRICS countries, while improvements in education negatively impact CO 2 emissions. Therefore, institutional and legal arrangements to combat the shadow economy would be beneficial in decreasing CO 2 emissions.