Fiscal pressure and carbon intensity: A quasi-natural experiment based on education authority reform

Abstract

Local governments are experiencing a sharp increase in fiscal pressures because of the slowdown in economic shifts and the external shock of COVID-19. Existing research is relatively scarce on how fiscal pressures affect carbon intensity. Therefore, this study investigated the impact of fiscal pressures on carbon intensity using a quasi-natural experiment measuring exogenous changes in fiscal pressures with the education authority reform, employing the continuous difference-in-difference technique based on a panel data set of 233 Chinese cities from 2008 to 2019. The statistical results indicate that the fiscal pressure generated by the education authority reform targets significantly increases carbon intensity. Increasing fiscal pressures boost carbon intensity by reducing government environmental concerns, upgrading industrial structure, increasing energy consumption, and weakening green technology innovation. Manifestly, the influence of fiscal pressures on promoting carbon intensity is larger in cities with low administrative prefecture levels, resource-based economies, and low financial resources.