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Does China’s Pollution Levy Standards Reform Promote Green Growth?

Zhengge Tu (), Tao Zhou () and Ning Zhang ()
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Zhengge Tu: School of Economics and Business Management, Central China Normal University, Wuhan 430079, China
Tao Zhou: School of Economics and Business Management, Central China Normal University, Wuhan 430079, China

Sustainability, 2019, vol. 11, issue 21, 1-18

Abstract: Estimating the impact of environmental taxes on economic output is of great theoretical value for promoting green growth in China. Using a dataset of 232 cities from 2004 to 2014, this paper investigates the effect of pollution levy standards reform (PSR) on green total factor productivity (GTFP). We employ directional distance functions (DDF) computed by data envelopment analysis (DEA) to derive GTFP based on the Malmquist–Luenberger (ML) productivity index. Then, we investigate the impacts of PSR on China’s GTFP using Difference-in-Differences (DID) estimation. The results reveal that PSR has an inhibitory effect on GTFP, via the mechanism of technological change. Furthermore, PSR has heterogeneous impacts on different city types. The results indicate that PSR statistically significantly reduces GTFP in key environmental protection cities (KEPCs), large cities, and eastern cities, but that it has less impact on non-KEPCs, small/medium cities, megacities, and cities in central areas.

Keywords: pollution levy standards reform; green total factor productivity; DEA; Difference-in-Differences (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2019
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