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

Jiamin Liu, Xiaoyu Ma (), Bin Zhao, Qi Cui, Sisi Zhang and Jiaoning Zhang
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Jiamin Liu: Xinjiang Innovation Management Research Center, Xinjiang University, Urumqi 830002, China
Xiaoyu Ma: Xinjiang Innovation Management Research Center, 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
Sisi Zhang: Xinjiang Innovation Management Research Center, Xinjiang University, Urumqi 830002, China
Jiaoning Zhang: Xinjiang Innovation Management Research Center, Xinjiang University, Urumqi 830002, China

Sustainability, 2023, vol. 15, issue 14, 1-31

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.

Keywords: mandatory environmental regulation; new environmental protection law; labor demand; green innovation transformation; financial constraints; fintech (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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