IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v82y2024icp400-416.html
   My bibliography  Save this article

Environmental regulation and employment: Evidence from China's new Environmental Protection Law

Author

Listed:
  • Li, Zhuo
  • Li, Yuanqi

Abstract

Realizing environmental protection and employment stability when facing strict environmental regulations is an essential issue of concern for many developing countries, including China. Based on a dataset of Chinese listed companies and a dataset of Chinese individual labor-force surveys, this paper uses an estimation technique pairing propensity score matching with a difference-in-differences estimator to examine the impact of the new Environmental Protection Law (EPL) on the supply and demand of labor at the micro level and the reallocation effect of interindustry labor at the macro level. The results show that the new EPL generated employment losses at the micro level. The policy reduces firms’ labor demand by lowering firms’ output and total investment expenditures and, in the process, does not stimulate firms’ innovative behavior. Moreover, implementing the new EPL reduces the wage income of workers, which in turn reduces the labor supply. Conversely, at the macro level, the new EPL promotes the transfer of labor from polluting to cleaner industries, realizes the reallocation of labor between industries, and thus promotes the transformation and upgrading of regional industrial structure.

Suggested Citation

  • Li, Zhuo & Li, Yuanqi, 2024. "Environmental regulation and employment: Evidence from China's new Environmental Protection Law," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 400-416.
    • Handle: RePEc:eee:ecanpo:v:82:y:2024:i:c:p:400-416
    DOI: 10.1016/j.eap.2024.03.019
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592624000742
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eap.2024.03.019?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. W. Reed Walker, 2011. "Environmental Regulation and Labor Reallocation: Evidence from the Clean Air Act," American Economic Review, American Economic Association, vol. 101(3), pages 442-447, May.
    2. Morgenstern, Richard D. & Pizer, William A. & Shih, Jhih-Shyang, 2002. "Jobs Versus the Environment: An Industry-Level Perspective," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 412-436, May.
    3. Wang, Ailun & Hu, Shuo & Lin, Boqiang, 2021. "Can environmental regulation solve pollution problems? Theoretical model and empirical research based on the skill premium," Energy Economics, Elsevier, vol. 94(C).
    4. E. Mark Curtis, 2018. "Who Loses under Cap-and-Trade Programs? The Labor Market Effects of the NOx Budget Trading Program," The Review of Economics and Statistics, MIT Press, vol. 100(1), pages 151-166, March.
    5. Hua Wang & Nlandu Mamingi & Benoit Laplante & Susmita Dasgupta, 2003. "Incomplete Enforcement of Pollution Regulation: Bargaining Power of Chinese Factories," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(3), pages 245-262, March.
    6. Berman, Eli & Bui, Linda T. M., 2001. "Environmental regulation and labor demand: evidence from the South Coast Air Basin," Journal of Public Economics, Elsevier, vol. 79(2), pages 265-295, February.
    7. Gray, Wayne B. & Shadbegian, Ronald J. & Wang, Chunbei & Meral, Merve, 2014. "Do EPA regulations affect labor demand? Evidence from the pulp and paper industry," Journal of Environmental Economics and Management, Elsevier, vol. 68(1), pages 188-202.
    8. Thorsten Beck & Ross Levine & Alexey Levkov, 2010. "Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States," Journal of Finance, American Finance Association, vol. 65(5), pages 1637-1667, October.
    9. Cai, Xiqian & Lu, Yi & Wu, Mingqin & Yu, Linhui, 2016. "Does environmental regulation drive away inbound foreign direct investment? Evidence from a quasi-natural experiment in China," Journal of Development Economics, Elsevier, vol. 123(C), pages 73-85.
    10. Xiaohua Wang & Qing Yang & Ning He, 2020. "Research on the Influence of Environmental Regulation on Social Employment—An Empirical Analysis Based on the STR Model," IJERPH, MDPI, vol. 17(2), pages 1-16, January.
    11. Martin, Ralf & de Preux, Laure B. & Wagner, Ulrich J., 2014. "The impact of a carbon tax on manufacturing: Evidence from microdata," Journal of Public Economics, Elsevier, vol. 117(C), pages 1-14.
    12. Hafstead, Marc A.C. & Williams, Roberton C., 2018. "Unemployment and environmental regulation in general equilibrium," Journal of Public Economics, Elsevier, vol. 160(C), pages 50-65.
    13. Glenn Sheriff & Ann E. Ferris & Ronald J. Shadbegian, 2019. "How Did Air Quality Standards Affect Employment at US Power Plants? The Importance of Timing, Geography, and Stringency," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(1), pages 111-149.
    14. Yip, Chi Man, 2018. "On the labor market consequences of environmental taxes," Journal of Environmental Economics and Management, Elsevier, vol. 89(C), pages 136-152.
    15. Ann E. Ferris & Ronald J. Shadbegian & Ann Wolverton, 2014. "The Effect of Environmental Regulation on Power Sector Employment: Phase I of the Title IV SO2 Trading Program," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(4), pages 521-553.
    16. Wu, Haoyi & Guo, Huanxiu & Zhang, Bing & Bu, Maoliang, 2017. "Westward movement of new polluting firms in China: Pollution reduction mandates and location choice," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 119-138.
    17. Yamazaki, Akio, 2017. "Jobs and climate policy: Evidence from British Columbia's revenue-neutral carbon tax," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 197-216.
    18. Liu, Mengdi & Shadbegian, Ronald & Zhang, Bing, 2017. "Does environmental regulation affect labor demand in China? Evidence from the textile printing and dyeing industry," Journal of Environmental Economics and Management, Elsevier, vol. 86(C), pages 277-294.
    19. Yao, Shouyu & Pan, Yuying & Sensoy, Ahmet & Uddin, Gazi Salah & Cheng, Feiyang, 2021. "Green credit policy and firm performance: What we learn from China," Energy Economics, Elsevier, vol. 101(C).
    20. Michael Greenstone, 2002. "The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1175-1219, December.
    21. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Guanglai & Zhang, Ning, 2024. "Environmental regulation and worker earnings: Evidence from city-level air quality standards in China," Energy Economics, Elsevier, vol. 138(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liao, Jiaqi & Zhang, Ning, 2024. "Environmental regulation and manufacturing employment: Evidence from China's Eleventh Five-Year Plan," China Economic Review, Elsevier, vol. 87(C).
    2. Hille, Erik & Möbius, Patrick, 2019. "Do energy prices affect employment? Decomposed international evidence," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 1-21.
    3. Yang, Shubo & Jahanger, Atif & Hu, Juan & Awan, Ashar, 2024. "Impact of China's carbon emissions trading scheme on firm-level pollution abatement and employment: Evidence from a national panel dataset," Energy Economics, Elsevier, vol. 136(C).
    4. Liu, Mengdi & Tan, Ruipeng & Zhang, Bing, 2021. "The costs of “blue sky”: Environmental regulation, technology upgrading, and labor demand in China," Journal of Development Economics, Elsevier, vol. 150(C).
    5. Wang, Chang’an & Liu, Xiaoqian & Li, Han & Yang, Cunyi, 2023. "Analyzing the impact of low-carbon city pilot policy on enterprises' labor demand: Evidence from China," Energy Economics, Elsevier, vol. 124(C).
    6. Olivier Deschenes, 2018. "Environmental regulations and labor markets," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-22, November.
    7. Lu, Shuling & Yang, Qijing, 2024. "Price of going green: The employment effects of the environmental protection tax in China," China Economic Review, Elsevier, vol. 87(C).
    8. Zhang, Guanglai & Zhang, Ning, 2024. "Environmental regulation and worker earnings: Evidence from city-level air quality standards in China," Energy Economics, Elsevier, vol. 138(C).
    9. Jiyu Zhao & Ning Zhang, 2023. "Environmental regulation and labor market: a bibliometric analysis," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 6095-6116, July.
    10. Marin, Giovanni & Vona, Francesco, 2019. "Climate policies and skill-biased employment dynamics: Evidence from EU countries," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    11. Mao, Jie & Wang, Chunhua & Yin, Haitao, 2023. "Corporate responses to air quality regulation: Evidence from a regional environmental policy in China," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    12. Yusen Gao & Changsheng Hu & Yue Yang, 2022. "Will tougher environmental policy reduce the employment of industrial enterprises? The heterogeneity analysis based on enterprise level and city level," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1810-1834, September.
    13. Ling-Yun He & Xiao-Feng Qi, 2021. "Environmental Courts, Environment and Employment: Evidence from China," Sustainability, MDPI, vol. 13(11), pages 1-16, June.
    14. Marin, Giovanni & Vona, Francesco, 2021. "The impact of energy prices on socioeconomic and environmental performance: Evidence from French manufacturing establishments, 1997–2015," European Economic Review, Elsevier, vol. 135(C).
    15. repec:hal:spmain:info:hdl:2441/5ahh4t5kfl8nprei89ignlk5nl is not listed on IDEAS
    16. Wang, Xu & Wen, Ziyu & He, Lingyun & Zheng, Haoyang & Yang, Tengfei & Long, Ruyin, 2024. "The role of imperfect market structure in the employment effect of emissions trading scheme in China: A theoretical extension and empirical investigation," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 920-937.
    17. repec:hal:spmain:info:hdl:2441/1fkb59dcsg9alqqq6qv18jj5us is not listed on IDEAS
    18. Luo, Ximing & Dong, Cong & Dong, Xiucheng, 2024. "How economic transformation influence the employment of resource-based cities: Evidence from Shanxi Province, China," Resources Policy, Elsevier, vol. 89(C).
    19. repec:spo:wpmain:info:hdl:2441/5ahh4t5kfl8nprei89ignlk5nl is not listed on IDEAS
    20. Lei Wen & Hongbing Li & Xueying Bian, 2024. "Local environmental legislation and employment growth: evidence from Chinese manufacturing firms," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(7), pages 16917-16955, July.
    21. Liao, Tianlong & Liu, Guanchun & Liu, Yuanyuan & Lu, Rui, 2023. "Environmental regulation and corporate employment revisited: New quasi-natural experimental evidence from China's new environmental protection law," Energy Economics, Elsevier, vol. 124(C).
    22. Ran Gu & Zenghua He, 2023. "Can Environmental Regulation Improve Labor Allocation Efficiency? Evidence from China’s New Environmental Protection Law," Sustainability, MDPI, vol. 15(7), pages 1-15, March.

    More about this item

    Keywords

    Environmental regulation; Firm's labor demand; Resident's labor supply; Interindustry labor reallocation; PSM-DID method;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:82:y:2024:i:c:p:400-416. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.