Does Environmental Regulation Have an Employment Dividend? Evidence from China

Abstract

Environmental regulations not only benefit environmental improvement but may also have a potential employment dividend, which is important for sustainable economic development. Based on the provincial panel data of China from 1997 to 2019, the spatial Dubin model is used to analyze the spatial spillover effects of environmental regulation on employment. From the findings, there is a significant spatial agglomeration characteristic in the employment scale. The environmental regulation positively influences the local employment scale, while there is a negative spatial effect on employment in neighboring regions. With regards to the regional heterogeneity analysis, environmental regulation has a spatial negative correlation with employment in coastal areas and less polluted areas. Additionally, in inland areas and less polluted areas, environmental regulation has a significant positive impact on the employment scale. Meanwhile, market-based environmental regulation has the potential to expand the employment scale in local and neighboring areas, while command-and-control environmental regulation impacts negatively on employment in neighboring areas. This study found that environmental regulation has an employment dividend. These findings reveal the spatial dependence between environmental regulation and employment, which will help policy makers consider the environmental and employment effects of environmental regulation more comprehensively. Therefore, the government should formulate targeted policies under regional differences to promote high-quality employment and construct a multiple governance environmental regulatory system.