Local governments’ environmental targets and green total factor productivity in Chinese cities

Di Zhou, Xiaoshuo Yin and Dongchun Xie

Economic Modelling, 2023, vol. 120, issue C

Abstract: Environmental targets can restrain the government's actions to a certain extent, so whether they affect regional green upgrading becomes an issue worthy of attention; however, few studies have discussed the impact of environmental targets on green total factor productivity (GTFP). Using a sample of 232 Chinese cities from 2004 to 2014, we apply difference-in-differences based on propensity score matching to investigate the influence of governments' environmental targets on city GTFP. We find that environmental targets enhance city GTFP. While exploring mechanisms, we uncover that firm green innovation, government subsidies, and land allocation primarily drive a positive relationship. Furthermore, the positive effect of environmental targets is more significant in midwestern, non-resource-based, and dirty cities. Our paper emphasizes the importance of governmental intervention in regional green upgrading, providing a basis for local governments in developing countries to improve policymaking in this area.

Keywords: Environmental targets; Green total factor productivity; Innovation; Difference-in-differences; Propensity score matching (search for similar items in EconPapers)
JEL-codes: H11 O21 R11 R15 R58 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:120:y:2023:i:c:s0264999323000019

DOI: 10.1016/j.econmod.2023.106189

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