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More green, less labor gains? Green factory and labor income share in China

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  • Wei, Xiahai
  • Jiang, Feng
  • Su, Yaqin

Abstract

Green Manufacturing, a pivotal aspect of green transformation, carries high expectations for its potential role in wealth creation and equitable distribution. This paper investigates whether the growth dividend resulting from Green Manufacturing benefits workers. Leveraging the “Green Factory” list released in 2017 and subsequent years as a quasi-natural experiment, we apply a time-varying difference-in-differences methodology to analyze the income distribution effects of Green Manufacturing. Our findings reveal that Green Manufacturing significantly boosts labor productivity within companies but does not notably impact worker wages, leading to a decline in the labor income share. Furthermore, we show that alleviating financing constraints and fostering green innovation are two prominent operating mechanisms, while human capital upgrading shows negligible effects. Overall, the evidence suggests that the growth dividends stemming from Green Manufacturing do not evenly benefit all input factors.

Suggested Citation

  • Wei, Xiahai & Jiang, Feng & Su, Yaqin, 2024. "More green, less labor gains? Green factory and labor income share in China," Energy Economics, Elsevier, vol. 133(C).
    • Handle: RePEc:eee:eneeco:v:133:y:2024:i:c:s0140988324001890
    DOI: 10.1016/j.eneco.2024.107481
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    More about this item

    Keywords

    Green factory; Labor income share; Financing constraints; Green innovation; Human capital upgrading;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • 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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