A futile help: do vertical transfer payments promote haze control?

Siying Yang, Hua Bai and An Li ()
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Siying Yang: Jilin University
Hua Bai: Jilin University
An Li: Harbin Institute of Technology

Economic Change and Restructuring, 2023, vol. 56, issue 5, No 22, 3436 pages

Abstract: Abstract Most existing studies believe that vertical transfer payments (VTPs) can enhance the fiscal capacity of local governments, thus improving the environment. Taking China's VTPs to resource-exhausted cities as an example, we analysed the impact of the VTP on city haze pollution (CHP) by using a progressive difference-in-difference (DID) model. Instead of improving city haze control in other studies, our results show that VTPs given by the central government to resource-exhausted cities aggravate CHP. Robustness tests based on several methods still confirm the above findings. Dynamic feature analysis shows that the aggravating effect of VTPs on CHP in resource-exhausted cities may continue for years. The mediating effect results show that VTPs aggravate CHP by inhibiting technological innovation and high-tech industrial agglomeration, which partly confirm the path-dependence theory. In addition, environmental regulation reduces the aggravating effect of VTPs on the CHP. Our conclusion supplements the ecological effect research of the VTP and has important reference significance for developing countries to improve the ecological governance of resource-exhausted cities by building and improving fiscal transfer systems and ecological compensation institutions.

Keywords: Vertical transfer payment; Resource-exhausted city; Haze pollution; Environmental regulation (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10644-023-09537-1

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