The Impact and Mechanism of the Creation of China’s Ecological Civilization Building Demonstration Zones on Labor Employment

Fu Jingwen, Shangguan Xiangle (), Wei Yusha and Saleem Faiza
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Fu Jingwen: School of Economics and Management, Northeast Agricultural University, Harbin, Heilongjiang, 150030, China
Shangguan Xiangle: School of Economics and Management, Northeast Agricultural University, Harbin, Heilongjiang, 150030, China
Wei Yusha: Graduate School of Businesss, University Sains Malaysia, Penang, 11700, Malaysia
Saleem Faiza: Graduate School of Businesss, University Sains Malaysia, Penang, 11700, Malaysia

Economics - The Open-Access, Open-Assessment Journal, 2025, vol. 19, issue 1, 18

Abstract: Balancing environmental protection with economic stability is a critical policy challenge worldwide. This article investigates the employment effects of one of China’s flagship green policies, leveraging the staggered rollout of the ecological civilization construction demonstration zones (ECCDZ) as a quasi-natural experiment. Our findings indicate that the designation of an ECCDZ leads to a significant reduction in firm-level employment. The mechanism analysis reveals two primary channels: firms reduce employment in response to both rising environmental compliance costs and a contraction in production scale. Further analysis shows that this adverse employment effect is more pronounced for larger firms, firms in labor- and capital-intensive sectors, firms with poor ESG performance, and those operating under stricter external environmental oversight. Our findings offer important policy implications for navigating green transitions in developing economies.

Keywords: ecological civilization construction demonstration zone; labor employment; multiphase difference-in-differences method (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:econoa:v:19:y:2025:i:1:p:18:n:1004

DOI: 10.1515/econ-2025-0177

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