Does the Emissions Trading Program Affect the Structure of Labor Force Employed by Enterprises?——Evidence from Chinese Listed Companies with SO2 Emission

Abstract

Abstract: Market-based environmental regulation is an effective means to address environmental externalities, and assessing the potential impact of environmental regulation on social effects is an important element of environmental policy assessment. We explore the impact of environmental regulation on companies' labor force hiring structure based on Porter's hypothesis, institutional compliance cost theory and externality theory, as well as combining local static equilibrium models, and explore the impact mechanisms involved. Taking the SO₂ emissions trading program as a quasi-natural experiment, we use DID to reveal the impact of the emissions trading program on companies' labor force hiring structure by observing the SO₂ emitting firms that were A-share listed from 2004 to 2018. the SO₂ emissions trading program has a significant inhibitory effect on enterprises labor hiring, and the annual effect shows an increasing trend from year to year. Further analysis reveals that the emissions trading program has a biasing effect on low-skilled labor force, which significantly reduces the demand for low-skilled labor in regulated enterprises and leads to a shift in the quality structure of the enterprise labor force to higher levels. In addition, the emissions trading program has a negative impact on labor force hiring by increasing labor productivity and labor price levels. The impact of the emissions trading program on the employment structure of companies' labor force is significantly heterogeneous, influenced by the strength of environmental enforcement, industry concentration and the nature of firm ownership. The findings of this paper provide important policy implications for further full-scale rollout of the SO₂ emissions trading program and securing employment of low-skilled labor.

Key words: emissions trading program, labor demand structure, low-skilled labor, labor productivity, DID

Lv Kangjuan, Zhu Siwei, Pan Minjie, Huang Min. Does the Emissions Trading Program Affect the Structure of Labor Force Employed by Enterprises?——Evidence from Chinese Listed Companies with SO₂ Emission[J]. Management Review, 2023, 35(12): 239-256.

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Does the Emissions Trading Program Affect the Structure of Labor Force Employed by Enterprises?——Evidence from Chinese Listed Companies with SO₂ Emission

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