Abstract
The trade-off between environmental regulation and job creation has been a dilemma for policymakers in the past decades. Exploiting the enterprise-level sample data, we conduct a difference-in-difference-in-differences (DDD) specification to estimate the overall effect of China’s Two Control Zones (TCZ) policy on labor demand, measured as the number of enterprise-level employees. We find that the industrial enterprises in TCZ cities, where the TCZ policy has been implemented after 1998, employed fewer workers in more polluting industries. Furthermore, these employment effects are very heterogeneous among different enterprise ownerships and control zones. The TCZ policy significantly decreased the labor demand in private enterprises or those located in the Acid Rain Control Zones (ARCZ) but had little impact on their state-owned and foreign-invested counterparts or those located in the Sulfur Dioxide Pollution Control Zones (SPCZ).
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