Labor allocation: How environmental regulation promotes industrial structure

Abstract

Using the panel data of China from 2007 to 2016, this paper explores the relationship between environmental regulation and industrial structure upgrading. The results show that environmental regulation has a causally positive impact on the upgrading of industrial structure. To explain the positive causal effect of environmental regulation, we adopt the mediation effect method and then confirm that allocated labor rather than technological innovation is a significant channel by which such regulation affects industrial structure upgrading. Ultimately, this paper complements the existing economic literature by justifying that labor allocation is a key mechanism to upgrade industrial structure in China.

Moving up the global value chain: Effects of water pollution control regulations in China

“…The additional costs associated with pollution abatement can prompt adjustments in competitiveness (Dechezleprêtre & Sato, 2017), productivity (Bai et al, 2023; Shapiro & Walker, 2018), financing (Fu, 2020; Zhang et al, 2023), and investment (Liu et al, 2022). These effects further lead to changes in trade (Chen et al, 2022; Zhang et al, 2020), FDI (Cai et al, 2016; Hanna, 2010; Li et al, 2022), economic growth (Liu & Bai, 2022) or other economic outcomes (Ederington & Minier, 2003; Levinson & Taylor, 2008; Lin et al, 2023). However, it is worth noting that the empirical findings regarding the significant effect of environmental regulations on gross trade flows are not consistently conclusive.…”