Evaluating the employment effect of China’s carbon emission trading policy: Based on the perspective of spatial spillover

Abstract

With the gradual strengthening of environmental supervision, how to coordinate the relationship between environmental protection and full employment has become an urgent problem. This paper takes China’s carbon emission trading policy as the research subject, and evaluates the employment effect of carbon emission trading policy from the perspective of micro enterprises under the premise of considering the spatial spillover effect. This paper aims to verify and evaluate the spatial spillover effect of China’s carbon emission trading pilot policy on labor demand of enterprises, and study the effect of environmental policies on the employment market in China. Firstly, from the theoretical point of view, comparisons among the differences of the average employment effect, spillover effect and total effect coefficient of carbon trading right policy are conducted under the condition of spillover effect or not. Secondly, from the empirical perspective and relaxing the STUVA conditions, a Triple Difference Model is constructed to evaluate the impact of carbon emission trading policy on the labor demand of enterprises by using the panel data of China A-share listed companies in Shanghai and Shenzhen from 2008 to 2017. Thirdly, this paper further uses the synthetic control method to analyze the employment effect differences of carbon emission trading policies in different pilot areas of China. The results show that the carbon emission trading policy in China has an about 10 percent positive spillover effect on the neighboring provinces in pilot areas. Moreover, the results indicate that China’s carbon emission trading policy has generated some employment dividend, and the total effect is about 11.5 percent when the ratio of individual sample is considered. In addition, the impact of carbon emission trading policy on employment is gradually increasing, and the employment effect of carbon trading policies in different pilot areas of China is quite dissimilar. The findings of this paper confirm the positive employment effect of China’s carbon emission trading policy, and have important policy implications for the further promotion of the national carbon emission trading market. At the same time, it helps to clarify the relationship between environmental protection and full employment. • Verifies and evaluates the spatial spillover effect of carbon trading policy. • Constructs a Triple Difference Model for evaluating the impact of carbon trading policies on the labor demand of enterprises. • Finds about 10% positive spillover effect of the carbon emission rights trading policy in China. • Shows about 11.5% total employment effect of carbon emission trading policy when the individual sample ratio was considered.