Urbanization and energy intensity: evidence from the institutional threshold effect

This research, which considers the rapid growth of urbanization and the concerns about energy security, analyzes the effect of urbanization on energy intensity by using the panel data of 72 countries between 2000 and 2014. The impact of institutional quality on the relationship between urbanization and energy intensity is also evaluated on the basis of a panel threshold model. Results suggest that the increase in urbanization leads to higher energy intensity. However, this positive effect of urbanization on energy intensity can be weakened by 0.033 when the institutional quality exceeds the threshold value. The positive mediating effect of institutional quality comprises approximately 31.37% of the total effect. Furthermore, the institutional threshold effect varies across country income and energy types, and it promotes more energy reduction and less energy consumption in OECD and non-OECD groups, respectively. The institutional threshold effect is only significant for fossil energy group but not for the renewable energy group.