Abstract
Estimating the impact of environmental taxes on economic output is of great theoretical value for promoting green growth in China. Using a dataset of 232 cities from 2004 to 2014, this paper investigates the effect of pollution levy standards reform (PSR) on green total factor productivity (GTFP). We employ directional distance functions (DDF) computed by data envelopment analysis (DEA) to derive GTFP based on the Malmquist–Luenberger (ML) productivity index. Then, we investigate the impacts of PSR on China’s GTFP using Difference-in-Differences (DID) estimation. The results reveal that PSR has an inhibitory effect on GTFP, via the mechanism of technological change. Furthermore, PSR has heterogeneous impacts on different city types. The results indicate that PSR statistically significantly reduces GTFP in key environmental protection cities (KEPCs), large cities, and eastern cities, but that it has less impact on non-KEPCs, small/medium cities, megacities, and cities in central areas.
Highlights
Over the past three decades, China’s economy has developed rapidly and has had remarkable achievements in many fields
The effect of pollution levy standards reform (PSR) on green total factor productivity (GTFP) (DEA-based measure) without control variables is shown in column (1), while columns (2)–(6) list the results as the control variables were gradually introduced in order to re-examine the effects
In panel B, we found that PSR statistically significantly reduced the GTFP of large cities by decreasing technological progress (TECH) and efficiency change (EFFCH), which indicates that the effects of PSR on GTFP vary by city size
Summary
Over the past three decades, China’s economy has developed rapidly and has had remarkable achievements in many fields. A total of 36.1% of 463 Chinese cities with precipitation monitoring experienced acid rain [1] This terrible environmental pollution has seriously weakened residents’ health, decreased regional economic operational efficiency, and threatened the quality of the nation’s economic development. Some studies have found that the U.S Clean Air Act, enacted in 1970, caused high structural unemployment in pollution-intensive industrial enterprises and a decline in capital stocks, economic growth rates, and total factor productivity (TFP) [2,3]. There have been few investigations in the existing literature on the impact of PSR on green total factor productivity (GTFP), especially in China To fill this gap, this study sets out to examine whether PSR results in positive changes in regional GTFP. The last section represents conclusions derived from the presented research, and some policy implications can be proposed from the empirical results
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