Trade-off between carbon emissions and employment embodied in global value chains: A study based on enterprise heterogeneity in China

Abstract

Comprehensively measuring embodied carbon emissions and employment generation from global value chain (GVC) production activities is essential for GVC upgrades and sustainable development. Previous studies have ignored embodied carbon emissions and employment generation from GVC production activities involving cross-border direct investment, which may underestimate the impact of GVC participation. Using an intercountry input-output model distinguishing domestic and foreign-invested enterprises, this study measured embodied carbon emissions and employment generation in China's GVC production activities from 2005 to 2018 and explored their trade-offs based on the aggregate-embodied carbon employment intensity (ACEI). The major findings were as follows. (1) Trade-related GVC contributes more to embodied carbon emissions than to that of embodied employment. However, investment-related GVC had the opposite effect. Mixed trade and investment-related GVC contribute approximately equally to carbon emissions and employment. (2) China experienced increasing environmental losses relative to employment generation from GVC participation increased between 2005 and 2018. The environmental costs of creating employment units through investment-related GVC activities were lower than those for the other two GVC routes. (3) High R&D-intensive manufacturing industries suffered a notable decline in ACEI. This finding suggests that a double dividend for the environment and employment is more likely to be achieved in high-tech manufacturing industries. (4) The ACEI of foreign-invested enterprises in China was lower than that of domestic enterprises, particularly in the production-sharing activities between foreign-invested enterprises, which exhibited a better trade-off between socioeconomic benefits and environmental damages. These findings provide useful insights into the impact assessment of GVCs, which aid in achieving sustainable development in China and other emerging economies.