The impact of environmental regulations on employment: Quasi-experimental evidence from regulated and unregulated industries in China

Existing studies on the employment effect of environmental regulations focus exclusively on regulated sectors, but labour demand in unregulated sectors can also be affected in a general equilibrium framework. Using the designation of Key Cities for Air Pollution Control in 2001 in China as a quasi-e...

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Bibliographic Details
Published inApplied economics Vol. 56; no. 40; pp. 4827 - 4848
Main Authors Li, Zheng, Jin, Bohan
Format Journal Article
LanguageEnglish
Published London Routledge 26.08.2024
Taylor & Francis Ltd
Subjects
Aggregate data
Air pollution
China
difference-in-difference-in-differences
Economic analysis
Employment
Environmental regulation
Killing
Labor demand
labor market
Pollution control
Quasi-experimental methods
Regulation
Relocation
Robustness
Workers
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Summary:Existing studies on the employment effect of environmental regulations focus exclusively on regulated sectors, but labour demand in unregulated sectors can also be affected in a general equilibrium framework. Using the designation of Key Cities for Air Pollution Control in 2001 in China as a quasi-experiment, we employ PSM and DDD methods and find that the policy lowers employment in emission-intensive polluting firms, but it also increases employment in labour-intensive non-polluting firms, providing evidence of relocation of workers from regulated to unregulated industries. Evidence from city-level aggregate data suggests that the overall employment effect is minimal, and no evidence is found to suggest that workers move from the manufacturing sector to the services sector. The results are robust to a host of robustness checks. The finding implies that the job-killing effect of environmental regulations is over-stated, and non-polluting industries are not suitable comparison units in previous DID literature.
ISSN:0003-6846
1466-4283
DOI:10.1080/00036846.2023.2216442