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Does low-carbon pilot policy promote corporate green total factor productivity?

Author

Listed:
  • Liu, Yi
  • Wu, Kai
  • Liang, Xiaoyun

Abstract

This study investigates the impact of China’s low-carbon pilot policy on corporate green total factor productivity. Exploiting the staggered rollout of the policy across cities, we employ a difference-in-differences approach and find that the policy significantly increases the green total factor productivity of heavily polluting firms. This effect is driven by improvements in both green technological progress and efficiency. The positive impact is more pronounced for firms facing higher financial constraints, lower product market competition, and lower capital intensity. Textual analysis of annual reports reveals that the policy promotes corporate green total factor productivity by enhancing executives’ environmental awareness and facilitating firms’ green transformation. Our findings highlight the effectiveness of the low-carbon pilot policy in advancing China’s green development agenda and provide policy implications for other economies pursuing sustainable growth.

Suggested Citation

  • Liu, Yi & Wu, Kai & Liang, Xiaoyun, 2024. "Does low-carbon pilot policy promote corporate green total factor productivity?," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1-24.
  • Handle: RePEc:eee:ecanpo:v:84:y:2024:i:c:p:1-24
    DOI: 10.1016/j.eap.2024.08.015
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    More about this item

    Keywords

    Low-carbon pilot policy; Green total factor productivity; Executive green cognition; Corporate green transformation;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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