The Impact Of Air Pollution On Firm Total Factor Productivity

In the 14 th Five-Year Plan formulated by the 19 th Fifth Plenary Session of the Party,it is clearly proposed to continuously improve environmental quality,strengthen the synergistic control of multiple pollutants and regional synergistic management,enhance the synergistic control of fine particulate matter and ozone,and reach the goal of basically eliminating heavy polluted weather.In recent years,China has continued to increase ecological environmental protection efforts,air quality has improved significantly,showing a steady trend for the better.At present,air pollution is still at a high level,and both the government and enterprises are facing a severe test,and corresponding measures for air pollution prevention and control must be persistent.The specific impact of urban air pollution on enterprise productivity is studied at this time to provide management countermeasures for enterprises as well as policy inspiration for the government;further testing the implementation effect of ambient air quality standards policy helps the government to face up to its own treatment effect and further improve the policy.This paper first conducts an empirical analysis of the impact of air pollution on firm productivity,and carries out robustness tests and heterogeneity analysis,and finally tests to analyze the mediating effect of employee mobility.In order to mitigate the adverse effects caused by air pollution,many regulatory policies have been enacted and implemented in China.To test the effectiveness of the relevant air pollution control policies,this paper selects the Ambient Air Quality Standards(2012)as a quasi-natural experiment to conduct the study.The effectiveness of the policy is first tested using the double difference method(DID)to identify the impact of the policy on the total factor productivity of firms.A series of robustness tests are conducted to address the study results and to rule out possible endogeneity issues.In the mechanism analysis,the paths through which the air pollution treatment policy affects firms’ total factor productivity are further examined,and the results show that the treatment policy acts on total factor productivity mainly through two paths that affect firms’ total cost and innovation.Finally,the variability of the impact of the implementation of air pollution control policies on the productivity of firms with different ownership and different industry categories is identified.The empirical results of the paper find that(1)air pollution significantly inhibits the growth of firms’ total factor productivity,and the higher the concentration of air pollutants,the lower the productivity of firms.(2)Employee mobility acts as a mediating variable in the effect of air pollution on firm productivity,and air pollution causes outflow of employees,which affects firm productivity.(3)There is heterogeneity of air pollution on the productivity of firms with different ownership nature.Air pollution significantly reduces the productivity of non-state enterprises,while the effect on the productivity of state-owned enterprises is not significant.(4)The pilot implementation of the Ambient Air Quality Standards(2012)can effectively improve air quality and increase total factor productivity of enterprises,and the pilot implementation of the new standards has a significant positive effect on both air quality and enterprise productivity.(5)The ambient air quality standards(2012)will act on total factor productivity through two paths: affecting firm costs and firm innovation.(6)There is significant heterogeneity in the response of firm productivity to the policy among firms with different property rights and light and heavy pollution industries.Compared with non-state-owned enterprises,environmental policies promote total factor productivity more significantly in state-owned enterprises;compared with enterprises in heavy pollution industries,air pollution control policies promote productivity more significantly in enterprises in non-heavy pollution industries.