Abstract
Abstract This article provides evidence on the strong spillover effects of land use regulations on environmental regulation enforcement in China. We find that the establishment of China’s Land Supervision Bureaus, which effectively reduced land use violations, led to a significant relaxation of environmental regulations by local officials and an increase in cities’ pollution intensity and overall pollution. In addition, the detrimental environmental effects of land use supervision are particularly strong among cities governed by officials with stronger promotion incentives. The results are consistent with a model in which multitasking local officials loosen environmental regulations to meet GDP growth targets in response to reduced industrial land supply. We further support the model by documenting land use supervision’s negative effect on new firm entries but significantly positive effect on incumbent firms’ outputs. (JEL D73, H77, P26, Q53, R52)
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