IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i14p11298-d1198370.html
   My bibliography  Save this article

Mandatory Environmental Regulation, Enterprise Labor Demand and Green Innovation Transformation: A Quasi-Experiment from China’s New Environmental Protection Law

Author

Listed:
  • Jiamin Liu

    (Xinjiang Innovation Management Research Center, Xinjiang University, Urumqi 830002, China
    School of Economics and Management, Xinjiang University, Urumqi 830002, China)

  • Xiaoyu Ma

    (Xinjiang Innovation Management Research Center, Xinjiang University, Urumqi 830002, China
    School of Economics and Management, Xinjiang University, Urumqi 830002, China)

  • Bin Zhao

    (School of Economics, Ocean University of China, Qingdao 266100, China)

  • Qi Cui

    (Xinjiang Innovation Management Research Center, Xinjiang University, Urumqi 830002, China
    School of Economics and Management, Xinjiang University, Urumqi 830002, China)

  • Sisi Zhang

    (Xinjiang Innovation Management Research Center, Xinjiang University, Urumqi 830002, China
    School of Economics and Management, Xinjiang University, Urumqi 830002, China)

  • Jiaoning Zhang

    (Xinjiang Innovation Management Research Center, Xinjiang University, Urumqi 830002, China
    School of Economics and Management, Xinjiang University, Urumqi 830002, China)

Abstract

To improve the human living environment and maintain the balance of the ecosystem, the Chinese government implemented a new environmental protection law (NPL) in 2015. Based on data for Chinese A-share listed companies and prefecture-level cities from 2005 to 2020, a difference-in-difference model is used to empirically explore the impact of the mandatory environmental regulation on labor demand (LD) and green innovation transformation (GIT) for heavy pollution enterprise (HPE). The results indicate that NPL leads HPE to reduce LD and achieve GIT, compared to non-HPE. This finding still holds by a series of robustness tests. Lower financial constraints and higher fintech can alleviate the negative impact of the NPL on the LD of HPE and enhance the positive impact of the NPL on the GIT of HPE. From regional heterogeneity, NPL causes HPE to increase their labor in the eastern region but reduce labor in the middle and western regions. NPL positively affects the GIT and shows a “U” shape from the east-middle-west regions. From enterprise heterogeneity, NPL mainly has a significant dampening effect on the LD for old and high staff cost enterprises and has a greater positive impact on the GIT for these both types of enterprises. Meanwhile, there is a gradually increasing lag in the impact of NPL on LD and GIT. Our findings provide new perspectives for the government to implement the policy of NPL and for enterprises to transform development.

Suggested Citation

  • Jiamin Liu & Xiaoyu Ma & Bin Zhao & Qi Cui & Sisi Zhang & Jiaoning Zhang, 2023. "Mandatory Environmental Regulation, Enterprise Labor Demand and Green Innovation Transformation: A Quasi-Experiment from China’s New Environmental Protection Law," Sustainability, MDPI, vol. 15(14), pages 1-31, July.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:14:p:11298-:d:1198370
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/14/11298/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/14/11298/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dominic S.K. Lim & Eric A. Morse & Ronald K. Mitchell & Kristie K. Seawright, 2010. "Institutional Environment and Entrepreneurial Cognitions: A Comparative Business Systems Perspective," Entrepreneurship Theory and Practice, , vol. 34(3), pages 491-516, May.
    2. Francesco Vona & Giovanni Marin & Davide Consoli & David Popp, 2018. "Environmental Regulation and Green Skills: An Empirical Exploration," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(4), pages 713-753.
    3. Fang, Xingming & Wang, Lu & Sun, Chuanwang & Zheng, Xuemei & Wei, Jing, 2021. "Gap between words and actions: Empirical study on consistency of residents supporting renewable energy development in China," Energy Policy, Elsevier, vol. 148(PA).
    4. Dong Guo & Satyajit Bose & Kristina Alnes, 2017. "Employment implications of stricter pollution regulation in China: theories and lessons from the USA," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 19(2), pages 549-569, April.
    5. David Hémous & Morten Olsen, 2021. "Directed Technical Change in Labor and Environmental Economics," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 571-597, August.
    6. Guo, Mengmeng & Wang, Huixin & Kuai, Yicheng, 2023. "Environmental regulation and green innovation: Evidence from heavily polluting firms in China," Finance Research Letters, Elsevier, vol. 53(C).
    7. Danish, & Ulucak, Recep, 2021. "Renewable energy, technological innovation and the environment: A novel dynamic auto-regressive distributive lag simulation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 150(C).
    8. Luigi Aldieri & Maxim Kotsemir & Concetto Paolo Vinci, 2019. "The impact of environmental innovations on job-creation process: an empirical investigation for Russian regions," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 21(2), pages 285-306, April.
    9. 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.
    10. Chen, Xiaohui & Teng, Lei & Chen, Wen, 2022. "How does FinTech affect the development of the digital economy? Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 61(C).
    11. Du, Kerui & Cheng, Yuanyuan & Yao, Xin, 2021. "Environmental regulation, green technology innovation, and industrial structure upgrading: The road to the green transformation of Chinese cities," Energy Economics, Elsevier, vol. 98(C).
    12. Mingyue Wang & Junbi Zhou & Xiaojin Xia & Zitong Wang, 2022. "The Mixed Impact of Environmental Regulations and External Financing Constraints on Green Technological Innovation of Enterprise," IJERPH, MDPI, vol. 19(19), pages 1-18, September.
    13. Xu, Le & Yang, Lili & Li, Ding & Shao, Shuai, 2023. "Asymmetric effects of heterogeneous environmental standards on green technology innovation: Evidence from China," Energy Economics, Elsevier, vol. 117(C).
    14. Greenstone, Michael & Gayer, Ted, 2009. "Quasi-experimental and experimental approaches to environmental economics," Journal of Environmental Economics and Management, Elsevier, vol. 57(1), pages 21-44, January.
    15. Wu, Haitao & Hao, Yu & Ren, Siyu, 2020. "How do environmental regulation and environmental decentralization affect green total factor energy efficiency: Evidence from China," Energy Economics, Elsevier, vol. 91(C).
    16. Buchak, Greg & Matvos, Gregor & Piskorski, Tomasz & Seru, Amit, 2018. "Fintech, regulatory arbitrage, and the rise of shadow banks," Journal of Financial Economics, Elsevier, vol. 130(3), pages 453-483.
    17. Genwen Zhang & Chaoyang Fang & Wangfei Zhang & Qiong Wang & Donglan Hu, 2019. "How Does the Implementation of the New Environmental Protection Law Affect the Stock Price of Heavily Polluting Enterprises? Evidence from China’s Capital Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(15), pages 3513-3538, December.
    18. Gray, Wayne B, 1987. "The Cost of Regulation: OSHA, EPA and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 77(5), pages 998-1006, December.
    19. Manfred Lenzen & Arne Geschke & James West & Jacob Fry & Arunima Malik & Stefan Giljum & Llorenç Milà i Canals & Pablo Piñero & Stephan Lutter & Thomas Wiedmann & Mengyu Li & Maartje Sevenster & Janez, 2022. "Implementing the material footprint to measure progress towards Sustainable Development Goals 8 and 12," Nature Sustainability, Nature, vol. 5(2), pages 157-166, February.
    20. Dylan G. Rassier & Dietrich Earnhart, 2010. "The Effect of Clean Water Regulation on Profitability: Testing the Porter Hypothesis," Land Economics, University of Wisconsin Press, vol. 86(2), pages 329-344.
    21. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2006. "The Polarization of the U.S. Labor Market," American Economic Review, American Economic Association, vol. 96(2), pages 189-194, May.
    22. Francesco Vona & Giovanni Marin & Davide Consoli & David Popp, 2018. "Environmental Regulation and Green Skills: An Empirical Exploration," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(4), pages 713-753.
    23. Xin Zhang & Eric A. Davidson & Denise L. Mauzerall & Timothy D. Searchinger & Patrice Dumas & Ye Shen, 2015. "Managing nitrogen for sustainable development," Nature, Nature, vol. 528(7580), pages 51-59, December.
    24. Su, Chi-Wei & Yuan, Xi & Umar, Muhammad & Lobonţ, Oana-Ramona, 2022. "Does technological innovation bring destruction or creation to the labor market?," Technology in Society, Elsevier, vol. 68(C).
    25. Fang, Zhenming & Kong, Xiaoran & Sensoy, Ahmet & Cui, Xin & Cheng, Feiyang, 2021. "Government’s awareness of Environmental protection and corporate green innovation: A natural experiment from the new environmental protection law in China," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 294-312.
    26. 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.
    27. 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.
    28. Kim, Dong-Hyeon & Lin, Shu-Chin, 2017. "Human capital and natural resource dependence," Structural Change and Economic Dynamics, Elsevier, vol. 40(C), pages 92-102.
    29. Lee, In & Shin, Yong Jae, 2018. "Fintech: Ecosystem, business models, investment decisions, and challenges," Business Horizons, Elsevier, vol. 61(1), pages 35-46.
    30. Mark A Chen & Qinxi Wu & Baozhong Yang, 2019. "How Valuable Is FinTech Innovation?," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 2062-2106.
    31. Sun, Chuanwang & Ding, Dan & Fang, Xingming & Zhang, Huiming & Li, Jianglong, 2019. "How do fossil energy prices affect the stock prices of new energy companies? Evidence from Divisia energy price index in China's market," Energy, Elsevier, vol. 169(C), pages 637-645.
    32. Charles J. Hadlock & Joshua R. Pierce, 2010. "New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index," The Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 1909-1940.
    33. Luo, Sumei & Sun, Yongkun & Yang, Fan & Zhou, Guangyou, 2022. "Does fintech innovation promote enterprise transformation? Evidence from China," Technology in Society, Elsevier, vol. 68(C).
    34. Yang, Qiuyue & Gao, Da & Song, Deyong & Li, Yi, 2021. "Environmental regulation, pollution reduction and green innovation: The case of the Chinese Water Ecological Civilization City Pilot policy," Economic Systems, Elsevier, vol. 45(4).
    35. 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.
    36. Sutherland, Andrew, 2018. "Does credit reporting lead to a decline in relationship lending? Evidence from information sharing technology," Journal of Accounting and Economics, Elsevier, vol. 66(1), pages 123-141.
    37. D’Adamo, Idiano & Gastaldi, Massimo & Ioppolo, Giuseppe & Morone, Piergiuseppe, 2022. "An analysis of Sustainable Development Goals in Italian cities: Performance measurements and policy implications," Land Use Policy, Elsevier, vol. 120(C).
    38. Christian Haddad & Lars Hornuf, 2019. "The emergence of the global fintech market: economic and technological determinants," Small Business Economics, Springer, vol. 53(1), pages 81-105, June.
    39. Li, Zhenran & Wang, Meng & Wang, Qunwei, 2023. "Job destruction and creation: Labor reallocation entailed by the clean air action in China," China Economic Review, Elsevier, vol. 79(C).
    40. Cole Matthew A & Elliott Rob J, 2007. "Do Environmental Regulations Cost Jobs? An Industry-Level Analysis of the UK," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-27, June.
    41. Shao, Shuai & Li, Baoli & Fan, Meiting & Yang, Lili, 2021. "How does labor transfer affect environmental pollution in rural China? Evidence from a survey," Energy Economics, Elsevier, vol. 102(C).
    42. Li, Rui & Chen, Yiwen, 2022. "The influence of a green credit policy on the transformation and upgrading of heavily polluting enterprises: A diversification perspective," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 539-552.
    43. Gao, Kang & Yuan, Yijun, 2021. "The effect of innovation-driven development on pollution reduction: Empirical evidence from a quasi-natural experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    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. Nilashi, Mehrbakhsh & Ali Abumalloh, Rabab & Keng-Boon, Ooi & Wei-Han Tan, Garry & Cham, Tat-Huei & Cheng-Xi Aw, Eugene, 2024. "Unlocking sustainable resource management: A comprehensive SWOT and thematic analysis of FinTech with a focus on mineral management," Resources Policy, Elsevier, vol. 92(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. 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.
    4. Francesco Vona & Giovanni Marin & Davide Consoli, 2019. "Measures, drivers and effects of green employment: evidence from US local labor markets, 2006–2014," Journal of Economic Geography, Oxford University Press, vol. 19(5), pages 1021-1048.
    5. repec:spo:wpmain:info:hdl:2441/2vteelu0n785l82j764n6ul273 is not listed on IDEAS
    6. 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).
    7. 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).
    8. 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).
    9. 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).
    10. repec:spo:wpmain:info:hdl:2441/2lpvf5mlr48dkah5qda4hh4e9g is not listed on IDEAS
    11. Guo, Junyan & Fang, Hanqing & Liu, Xuexin & Wang, Cizhi & Wang, Yuan, 2023. "FinTech and financing constraints of enterprises: Evidence from China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 82(C).
    12. repec:hal:spmain:info:hdl:2441/2vteelu0n785l82j764n6ul273 is not listed on IDEAS
    13. repec:hal:spmain:info:hdl:2441/2lpvf5mlr48dkah5qda4hh4e9g is not listed on IDEAS
    14. Galeone, Graziana & Ranaldo, Simona & Fusco, Antonio, 2024. "ESG and FinTech: Are they connected?," Research in International Business and Finance, Elsevier, vol. 69(C).
    15. Bretschger, Lucas & Jo, Ara, 2024. "Complementarity between labor and energy: A firm-level analysis," Journal of Environmental Economics and Management, Elsevier, vol. 124(C).
    16. Wang, Xiaoting & Hou, Siyuan & Kyaw, Khine & Xue, Xupeng & Liu, Xueqin, 2023. "Exploring the determinants of Fintech Credit: A comprehensive analysis," Economic Modelling, Elsevier, vol. 126(C).
    17. Hiranya Dissanayake & Catalin Popescu & Anuradha Iddagoda, 2023. "A Bibliometric Analysis of Financial Technology: Unveiling the Research Landscape," FinTech, MDPI, vol. 2(3), pages 1-16, August.
    18. 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).
    19. Pacelli, Vincenzo & Miglietta, Federica & Foglia, Matteo, 2022. "The extreme risk connectedness of the new financial system: European evidence," International Review of Financial Analysis, Elsevier, vol. 84(C).
    20. 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).
    21. repec:hal:spmain:info:hdl:2441/5ahh4t5kfl8nprei89ignlk5nl is not listed on IDEAS
    22. repec:hal:spmain:info:hdl:2441/1jrfjrj6fp8t6q12fv5lra520c is not listed on IDEAS
    23. 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.
    24. repec:spo:wpmain:info:hdl:2441/5ahh4t5kfl8nprei89ignlk5nl is not listed on IDEAS
    25. Lai, Xiaobing & Yue, Shujing & Guo, Chong & Zhang, Xinhe, 2023. "Does FinTech reduce corporate excess leverage? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 281-299.
    26. Mengdi Liu & Bing Zhang & Qiang Geng, 2018. "Corporate pollution control strategies and labor demand: evidence from China’s manufacturing sector," Journal of Regulatory Economics, Springer, vol. 53(3), pages 298-326, June.

    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:gam:jsusta:v:15:y:2023:i:14:p:11298-:d:1198370. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.