The Impact Of Environmental Regulation On Employment

The aim of this paper is to analyze the impact that the environmental regulation has on the labor demand from the enterprise level and explain the internal mechanisms of it as well. From the perspective of institutional changes, we present a new idea that green innovation of micro companies is going to help our society reach to a win-win situation both to our environment and the state of employment in our country. In view of this, we selected all the companies, up to 400 thousand, in Chinese Industry Statistical Database as our sample. In the first place, we unprecedentedly match the Urban Environment Pollution Panel data with Chinese Industry Statistical Database. We also calculated corporate TFP as one of the most important control variables in our model and made empirical analysis of how environmental pollution impacts employment. Entropy method has been used to build the pollution index, which is an alternative to the environmental regulation—the core variable of our model. The basic conclusion is that the environmental regulation can promote employment in the macro scale. In addition, we find there some clear regional or ownership disparities between companies.