The Role of Environmental Regulation and Technological Innovation in the Employment of Manufacturing Enterprises: Evidence from China

Die Li,Jinsheng Zhu

doi:10.3390/su11102982

Abstract

With the increasingly severe emission reduction pressures, it is an inevitable choice for China to improve the intensity of environmental regulation. At the same time, the impact of technological innovation on enterprise employment may lead to some new changes under the environmental regulation constraints. However, existing studies have not included environmental regulation into the theoretical framework of technological innovation and enterprise employment, nor has the influencing mechanism of environmental regulation and technological innovation in the employment of manufacturing enterprises been explored. This paper uses the panel data of listed manufacturing companies in the A-share market of Shanghai and Shenzhen from 2011 to 2017 to examine the impact of environmental regulation and technological innovation on the employment of manufacturing enterprises, and explore their influence mechanisms in a theoretical framework based the moderating effect model. The findings demonstrate the following: First, the technological innovation has a positive creative effect on enterprise employment. Second, the impact of environmental regulation on enterprise employment is significantly positive. Third, environmental regulation has a negative moderating effect on the impact of technological innovation on enterprise employment. Finally, the impacts of both environmental regulation and technological innovation on the employment of manufacturing enterprises are heterogeneous across enterprises due to differences in ownership structure, the degree of pollution, and technical density. Therefore, faced with the objective reality that environmental carrying capacity has reached or approached the upper limit, China needs to formulate a differentiated and diversified technological innovation system and environmental protection policy, improve the environmental innovation level of manufacturing enterprises, and form a green development model, which is of great significance for achieving high-quality development and stable employment.

Highlights

For a long time, China has relied on the comparative advantage of lower labor costs and environmental costs to participate in the international division of labor, promote the expansion of production scale through continuous investment, and realize the rapid growth of economic aggregation
Based on the direct impact of technological innovation on enterprise employment, as a new perspective, this paper aims to take environmental regulation as a moderating variable to analyze the relationship between technological innovation and enterprise employment, which will make the research on the relationship between technological innovation and employment more accurate and comprehensive
The general form of the econometric model for the exploration of the impact of technological innovation on enterprise employment is provided by Equation (1), while that of environmental regulation on enterprise employment is provide by Equation (2)

Summary

Introduction

China has relied on the comparative advantage of lower labor costs and environmental costs to participate in the international division of labor, promote the expansion of production scale through continuous investment, and realize the rapid growth of economic aggregation. With the increasingly strengthened domestic environmental constraints, diminishing marginal benefits of capital accumulation, and the rising labor costs, it is difficult to support the continued rapid growth of the economy. In the context of internal and external troubles, shifting economic growth to relying on total factor productivity and achieving innovative growth is the inevitable way out for the current Chinese economy. It is necessary to rely on innovation in manufacturing to bring about high-quality economic development, and to solve the employment problem to reduce the social burden of employment, so as to achieve the dual goals of high-quality development and full employment

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