Does environmental regulation affect labor investment Efficiency?Evidence from a quasi-natural experiment in China

Chunhua Chen, Dequan Jiang, Meng Lan, Weiping Li and Ling Ye

International Review of Economics & Finance, 2022, vol. 80, issue C, 82-95

Abstract: Applying the sulfur dioxide (SO2) emission trading system (ETS) as an exogenous shock to environmental regulation, we conduct a quasi-natural experiment to investigate the impact of environmental regulation on labor investment efficiency. Our results indicate that SO2 ETS impedes a firm's labor investment efficiency. This effect is driven by the firm's over-firing or under-hiring behaviors, not by the lower total investment efficiency. Moreover, we show that the impact of SO2 ETS is more pronounced in firms with higher agency costs and high labor adjusting costs. Besides, the low labor investment efficiency is not substantial for state-owned enterprises.

Keywords: Environmental regulation; Labor investment efficiency; Emission trading system; Natural experiment (search for similar items in EconPapers)
JEL-codes: E21 E22 E23 L60 O16 P23 P24 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:80:y:2022:i:c:p:82-95

DOI: 10.1016/j.iref.2022.02.018

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