Market-based environmental regulation and labor demand — An empirical study based on carbon emissions trading pilot policies

Tongtong Ge; Junming Pan

doi:10.63313/EBM.9117

Authors

Tongtong Ge Economics and Management of Southwest Petroleum University, Cheng du 610500, China Author
Junming Pan Economics and Management of Southwest Petroleum University, Cheng du 610500, China Author

DOI:

https://doi.org/10.63313/EBM.9117

Keywords:

Carbon emission trading, Labor demand, Labor reallocation, DID

Abstract

The carbon emission trading system is an effective policy tool to realise carbon emission reduction. However, environmental regulation will inevitably affect economic and social operation, how to realize the coordination between promoting environmental protection and stabilising employment is a question that needs to be answered urgently. Based on the micro data of listed companies and the macro data at the city level from 2010 to 2021, this paper uses multi-period DID to study the impact of the carbon emissions trading system on labor demand and its mechanism. It is found that the carbon emission trading system reduces the labor demand of enterprises but increases the employment of cities, and the overall employment effect is positive. The mechanism test shows that the carbon emission allowance trading system causes the reduction of enterprise labor demand mainly through the factor substitution effect, skills, and there is a different effect of the policy effect. Further research shows that the carbon emission right trading system make the flow of labor from polluting industries to non-polluting industries and from non-pilot areas to pilot areas. Therefore, the policy effect is inconsistent between micro and macro effects. The findings of this paper provide a useful reference for improving the carbon trading system and safeguarding employment

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