The Impact Of China’s Politically Motivated Environmental Policies On Wages And Employment

Environmental policy has not only the health benefits of reducing pollution,but also its economic costs.Its negative impact on wages and employment is considered to be one of the main side effects.At present,the literature on the impact of environmental regulation on wages and employment is mainly concentrated in developed countries.There is very little research on developing countries,especially China.The only relevant literature focuses on a specific industry or region,and there is little literature on the national wage and employment losses caused by national environmental policies.In addition,in addition to the huge differences in economic structure and labor market between China and developed countries,China’s unique official incentive system also plays an important role in the implementation of environmental policies,which is bound to be further transmitted to the labor market.At present,there is a lack of literature to explore the role of political incentives with Chinese characteristics in the relationship between environmental regulation and wages and employment.This paper attempts to answer the above questions.This paper examines the impact of the dual control area policy on wages and employment across the country after the environmental protection indicators were incorporated into the performance appraisal system of local officials in 2005.The study found that the dual control area policy reduced the total wages of the processing group by 3.1%,and the conclusion is still valid after considering a series of robustness tests,but it has no impact on enterprise employment.Through the decomposition of workers’income,this paper finds that compared with the basic wage,the bonus income has decreased significantly,while the unemployment insurance has increased.The costbenefit analysis shows that China’s national environmental policies have brought greater losses to workers’ welfare than developed countries.Heterogeneity analysis shows that state-owned enterprises,small enterprises,labor-intensive enterprises,lowtech enterprises and low-income workers suffer greater wage losses.In the mechanism analysis,from the perspective of environmental economics,it is found that the reason for the decline of total wages lies in the output effect(the decline of enterprise output)and substitution effect(the increase of end pollution treatment equipment);From the analysis of political economics,it is found that the wages of workers in the mayor’s area with promotion opportunities are greatly impacted;Mayors with high possibility of government enterprise connection may be lazy,and the resulting inaction in environmental governance may have a small impact on the wages of workers in their jurisdiction.Taking the dual control area policy as the quasi natural experiment,this paper identifies the wage and employment role of the political incentive environmental policy with Chinese characteristics,enriches and expands the relevant research,and has a certain reference significance for a better understanding of the cost-benefit of China’s political incentive environmental protection policy.