How does energy efficiency affect employment? Evidence from Chinese cities

Abstract

Improving energy efficiency and securing employment are critical challenges for sustainable growth, especially in developing countries. Using an econometric model and panel data from China's prefecture-level cities from 2006 to 2019, this study provides empirical evidence of the impact of increased energy efficiency on employment. Multiple robustness test results reveal that a 1% rise in the energy intensity reduction rate leads to a 2% increase in the employment growth rate. According to heterogeneity tests, cities with low energy efficiency and depressed employment rates, compared to flourishing cities, may greatly benefit from increased energy efficiency. Furthermore, this study examines the influence mechanism of energy efficiency on employment. The outcome indicates that booming trade and technological progress magnify the positive impact of increased energy efficiency on employment. In addition, decreasing regional investment in the energy industry is one of the mechanisms by which improved energy efficiency promotes employment. Finally, this study proposes certain energy-saving policies at the city level to guide future policy refinement.