Environmental regulation and manufacturing employment: Evidence from China's Eleventh Five-Year Plan

Jiaqi Liao and Ning Zhang

China Economic Review, 2024, vol. 87, issue C

Abstract: This paper employs a difference-in-difference-in-differences (DDD) identification strategy to investigate the impact of environmental regulation on employment in the manufacturing sector in China, using the country's Eleventh Five-Year Plan (FYP) as a quasi-experiment. Our results indicate that the 11th FYP had a significant negative impact on firm employment, with every 10% increase in SO2 reduction targets resulting in a 3.1% decrease in employment for firms in high-pollution industries. This corresponds to a reduction of approximately 9 people per firm. Our findings indicate that firms primarily reduce SO2 emissions by reducing production levels and transitioning to cleaner energy sources. Additionally, we show that political promotion incentives played a role in driving the decline in employment. Heterogeneous tests reveal that the impact was more significant for private firms, SMEs and trade-exposed firms.

Keywords: Environmental regulation; Employment; Manufacturing firm (search for similar items in EconPapers)
JEL-codes: Q52 Q53 Q58 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:87:y:2024:i:c:s1043951x24001159

DOI: 10.1016/j.chieco.2024.102226

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