Research On The Effect Of Environmental Regulation On Labor Employment

Environmental protection and stable employment are related to people’s livelihood and have always been the focus of the government,society and academia.In the last forty years,although China’s economy has made impressive Chinese miracles,it has also paid heavy costs of ecological environment.At the same time,as China’s economic growth slows down in recent years,with a large number of landless farmers moved to cities and universities expanded their enrollment for many years,the employment situation is serious In brief,China faces dual pressures of environmental pollution and unemployment problems these years.With the strengthening of environmental regulation,a lot of industrial enterprises have been restricted or even shut down.Although the quality of ecological environment has improved to a certain extent,it may also cause serious unemployment problems.Under the special background of the shrinking global markets and severe employment situations caused by the COVID-19,it’s of great importance and value for China to deeply study the impact of environmental regulation on labor employment,and explore whether there is a "Double Dividend Hypothesis" of environmental protection and full employment in China.The impact of environmental regulation on the employment have different aspects Besides direct effect,it will also has indirect effect and spatial spillover effect.In view of this,this paper uses provincial panel data from 2004 to 2019 to test the impact mechanism of environmental regulation on labor employment.Firstly,the dynamic panel model is used to explore the direct impact of environmental regulation on employment scale.Secondly,mediation effect model is used to explore the indirect effect.Finally,the spatial econometric model is applied to study the spatial effects.The main conclusions of this article are as follows(1)The direct impact of environmental regulation on the scale of employment shows a U-shaped relationship at the national level.In other words,before a certain point,strengthening ER would inhibit the employment.Once the critical point is crossed,continuing to improve the intensity of environmental regulation will promote the employment.The research shows that China’s environmental regulation is still in the downward phase of the U curve.Therefore,in the short run,the "scale effect" is the main result of improving the intensity of ER,reducing the scale of enterprises,and thus decreasing the employment of labor.However,if the analysis period is extended,the"substitution effect" of environmental regulation will be dominant,and enterprises will replace resources and environmental factors with relatively cheap labor,launch a lot of pollution control and emission reduction activities,and promote labor employment.From a regional perspective,the direct impact in the eastern region also shows a U-shaped relationship,while in the other regions the impact is significantly negative.(2)The short-term impact of environmental regulation on labor employment through technological innovation is negative,while the long-term impact is positive.That is to say,environmental regulation would inhibit technological innovation through "following the cost effect" in the short term,while promote technological innovation through the"innovation compensation effect" in the long run.Also,the technological innovation would reduce business costs and expand the scale of the enterprise as well as develop new products,promoting an increase in the scale of employment.Environmental regulation has a positive impact on employment through FDI and OFDI.Environmental regulations increase the entry threshold for foreign investors,reduce the expected profits of their investment in China,weaken the attraction of foreign enterprises,and thus weaken their employment crowding-out effect.Environmental regulation would increase the cost of enterprises,slow down the pace of enterprises going global,inhibit the outflow of production,and slightly promote the employment.(3)The impact of environmental regulation on the employment of local labor is U-shaped across the nation and the eastern region,while it has a significant inhibitory effect in the central and western regions.Compared with the conclusion in Chapter 3,theinflection point of the U curve moves to the right after considering the spatial effect.The impact of environmental regulations on the employment in neighboring areas also shows U-shaped throughout the country and the eastern region,and it has a negative effect in the other regions.As the environmental quality is linked to the assessment of local government,they focus more on environmental problems.The regulation policies among provincial present the coexistence of "race to the bottom competition" and "race to the top competition".In other words,the change of the intensity of environmental regulation in a region will lead to the complementary interaction of environmental regulation in surrounding regions,and then produce spatial spillover impact on the employment of labor force in neighboring regions through"scale effect" and "substitution effect".