Propensity Score Matching-difference In Difference Research Articles

Can environmental regulation stimulate the regional Porter effect? Double test from quasi-experiment and dynamic panel data models

Promoting environmental regulation and the reduction of carbon emissions is of great significance for sustainable development. China plans to achieve the following two major goals by 2030: to experience the peak of carbon dioxide emissions, and to be at the forefront of innovative countries in the world. The realization of these goals not only depends on the environmental regulation policy regarding carbon emissions, but also on the development imbalance among Chinese provinces. The Porter hypothesis theory holds that environmental regulation can produce the Porter effect and promote enterprise innovation; but few studies focused on the causal relationship between environmental regulation and the regional Porter effect. Under this framework, this paper uses propensity score matching - difference in difference (PSM-DID) to construct a quasi-experiment on China's carbon emissions trading pilot policy. Dynamic panel data models are used to double test whether environmental regulation can stimulate the regional Porter effect. The empirical results show that: (1) Under the premise of multiple robustness tests (whether quasi-experimental or dynamic panel data models), no evidence was found in support that environmental regulation can stimulate the regional Porter effect. (2) The reason why the regional Porter effect does not been stimulated is that the pollution heaven effect, induced by the carbon emissions trading pilot policy, counteracts the Porter effect to a certain extent. (3) There is no non-linear relationship between environmental regulation and the regional Porter effect. (4) The analysis of spatial heterogeneity shows that environmental regulation cannot stimulate the Porter effect in the eastern, central, and western regions of China. This suggests that it is very important to establish appropriate provincial environmental regulation objectives and to conduct appropriate environmental regulation in combination with local resource endowments. This study provides quantitative evidence toward an in-depth understanding of the relationship between environmental regulation and the regional Porter effect as represented by the pilot policy of carbon emissions trading. A certain degree of reference is provided for the practice of environmental regulation in other developing countries.

Green Credit Policy and Maturity Mismatch Risk in Polluting and Non-Polluting Companies

A major issue is whether the implementation of China’s green credit policy will affect the coordinated development of corporate sustainable operations and environmental protection. This paper used a propensity score matching—difference-in-differences (PSM-DID) model to analyse the impact of China’s green credit policy implemented in 2012 on the maturity mismatch risk between investment and financing in polluting and non-polluting companies. We found that: (1) green credit policies can help reduce the risk of maturity mismatch between investment and financing for polluting companies; (2) the reduction of short-term bank credit is the main way to curb the risk of maturity mismatch risk between investment and financing; (3) the green credit policy has no obvious mitigation effect on the risk of maturity mismatch between investment and financing among polluting companies with environmental protection investment; (4) the mitigation effect of the green credit policy on the maturity mismatch risk is more significant in state-owned polluting companies and polluting companies in areas with a lower level of financial development. The empirical results show that China’s green credit policy helps stimulate the environmental protection behaviour of companies, as well as helping alleviate the capital chain risk caused by the maturity mismatch between investment and financing. In addition, despite the effect of heterogeneity, it can solve the contradiction between environmental protection and economic development.

Does central environmental inspection improves enterprise total factor productivity? The mediating effect of management efficiency and technological innovation.

The strong demand from the public to find new ways to both improve economy and protect nature has been evoked by "pollute first and control later", which is the previous Chinese mode of development. With the new round of central environmental inspection approaching, should the Chinese government continue to intensify its supervision? The policy effect of the first round of central environmental inspection in 2015 can be a good reference. Based on the data from 1498 listed companies during the period between 2014 and 2018, the Levinsohn-Petrin (LP) method was used to measure enterprises' total factor productivity. Also, a propensity score matching-difference in difference (PSM-DID) method was established to explore the impact of central environmental inspection on enterprises' total factor productivity and its impact mechanism. The results indicate that first, central environmental inspection improved the total factor productivity of enterprises by promoting management efficiency and technological innovation. Second, the mediating effect of management efficiency accounts for approximately 16.6% of the total effect, while the mediating effect of technological innovation accounts for only 7.7% of the total effect.

Has China’s Emission Trading System Achieved the Development of a Low-Carbon Economy in High-Emission Industrial Subsectors?

An emission trading system (ETS) is a powerful emission reduction tool for achieving low-carbon economic development in the world. Focusing on the industrial subsectors, this paper comprehensively analyzes the environmental and economic effects of the pilot ETS in China from the perspectives of economic development, technological optimization, and innovation-driven development by using the propensity score matching–difference in differences (PSM-DID) model based on 2005–2017 provincial panel data. This paper compensates for the limitations of existing studies on the effects of ETS on different subsectors; furthermore, the triple difference model (DDD) model is used to discuss the impacts of differences in environmental responsibility and economic potential among subsectors on policy effects. The empirical results show that: (1) The pilot ETS produces a 14.5% carbon reduction effect on the covered subsectors while reducing GDP by 4.8% without achieving a low-carbon economy. Thus, production decline is the main reason for carbon emission reductions. (2) Economic development factors have significant positive impacts on carbon emissions, while technological optimization and innovation-driven development are key factors for achieving reductions in carbon emissions. (3) The pilot ETS produces a 60.1% carbon emission inhibition effect and 23.2% GDP inhibition effect on the subsectors with greater environmental responsibility. Therefore, the Chinese government should fully simulate the impact of technological innovation and utilize resource endowment differences in the environmental and economic aspects of different sectors to achieve low-carbon economic development.

Is It Sustainable to Implement a Regional Payment for Ecosystem Service Programme for 10 Years? An Empirical Analysis From the Perspective of Household Livelihoods

The Paddy Land-to-Dry Land (PLDL) program, implemented in the upstream area of the Miyun Reservoir in China for 10 years, faces sustainability challenges. The issues stem from negative household responses due to the gradual weakening of its positive effects on household livelihoods. This study conducted a field survey based on a quasi-experimental method in the Luanping and Fengning Counties, Hebei Province. The average and heterogeneity effects of the PLDL program on household livelihoods regarding income and income structure were quantitatively evaluated, and the influence mechanisms were analyzed using the propensity score matching, difference-in-difference (PSM-DID) method. The PLDL's impacts on total household income per capita significantly increased during the 10 years of implementation, with a significant increase impacts on off-farm income and a decrease impacts on agricultural income. However, rising price indices have weakened these positive impacts on total household income. The impacts differed with respect to the distance from residence to the secondary river, and the age and health of the household head. The PLDL program contributed to increasing liquidity of rural land and labor, further altering household livelihood activities. The results enabled recommendations to be formed regarding sustainable implementation of the PLDL based on household livelihoods.

Too far east is west: tax risk, tax reform and investment timing

PurposeTax risk refers to the uncertainty of future corporate taxation. Tax reform is a key issue in major current tax system adjustments that seriously affect a firm's tax risk. In response to changes in the economic environment, many countries are actively executing tax reform. Long-term reforms implemented for a smooth transition may instead increase corporate risk. This study examines the relationship among tax risk, tax reform and investment timing.Design/methodology/approachSelecting the Shanghai Stock Exchange and Shenzhen Stock Exchange A-share listed companies' panel data from 2008 to 2017, the paper used survival analysis and the propensity score matching-difference in difference models.FindingsThe results show that a higher corporate tax risk results in more deferred investments, which are further examined using the latest Chinese value-added tax reform as a natural experiment.Originality/valueThe conclusion serves as an important reference for governments to balance reform time and to support enterprises in effectively identifying and managing tax risk under tax reform.

Impact of Development Zone Construction on Labor Share in China

The decline in the share of labor income is associated with rising income inequality, which raises a series of economic and social problems. These problems seriously threaten the sustainability of economic development. To maintain sustainable economic development, China’s government has invested hundreds of billions of dollars to build economic development zones by attracting high-tech enterprises into the zones. In our paper, we aim to analyze whether the construction of economic development zones can effectively increase the share of labor income. We use PSM-DID (Propensity Score Matching Difference-in-Difference) to evaluate the impact of establishing economic development zones in China on the labor income share of enterprises in economic development zones in 2006. We found that the establishment and construction of economic development zones increased the share of labor income through the “agglomeration effect” and “policy effect”. Estimation of the level of heterogeneity among economic development zones shows that, compared with provincial economic development zones, the construction of national economic development zones has a greater effect on increasing the labor income share of enterprises in those zones. Economic development zones in the eastern, central, and western regions should also increase their share of labor income areas.

Can the Introduction of an Environmental Target Assessment Policy Improve the TFP of Textile Enterprises? A Quasi-Natural Experiment Based on the Huai River Basin in China

Green development is an inevitable requirement to build a modern economic system and fundamental solution to pollution problems. Exploring the relationship between environmental regulation and enterprise total factor productivity (TFP) has great significance for realizing the win-win goal of achieving both environmental protection and economic development. Based on a firm-level dataset from 2000-2007, this paper explores the economic effects of the Environmental Target Assessment Policy of Huai River Basin (ETAP, HRB) in 2004, an environmental regulation that clarifies the responsibility of local governments, by identifying changes in the TFP of the clothing industry (CMI). The empirical findings support that the ETAP can significantly promote improvement in the TFP using the difference in differences (DID) method. Robustness tests, such as the triple differences (DDD) and propensity score matching-difference in differences (PSM-DID), are used to address concerns about the DID approach. Analysis of dynamic effects shows that the ETAP has no impact on enterprise TFP in 2004 but significantly improve the TFP on the next three years (2005-2007). The heterogeneity test results indicate that nonstate-owned enterprises are more sensitive to the ETAP, and the coefficient of the average treatment effect is 0.033. In addition, the ETAP has no noteworthy impact on large- and medium-scale enterprises but results in an average increase of 0.037 in small-scale enterprises’ TFP.

The Impact of Environmental Information Disclosure on the Firm Value of Listed Manufacturing Firms: Evidence from China.

In the last decade, the public concern over environmental problems has led to the emergence of environmental regulations in firms’ information disclosure on environmental practice, especially in some developing countries such as China. Based on a panel dataset composed of the listed manufacturing firms in China during 2006–2016, this paper uses the difference-in-differences (DID) model and the propensity score matching (PSM) method to investigate whether the Environmental Information Disclosure Measure (for Trial Implementation; EIDMT) affects the firm value. The results show that EIDMT exerts a significant impact on the listed manufacturing firms’ value. In consideration of the firm’s ownership, EIDMT plays a more important role in the firm value of non-state-owned firms than state-owned firms. Furthermore, using a PSM–DID model for eastern, central, and western China, we find that EIDMT significantly affects the firm value in eastern and western China but has little impact on central China.

Medical system and nutrition improvement for the rural elderly

BackgroundInsufficient nutrition intake has negatively influenced the health of the elderly in rural China where the problem of population aging is serious. The present study aims to explore whether the medical system, called the New Rural Cooperative Medical System (NRCMS), can improve the rural elderly’s nutrition intake and the mechanism behind it.MethodsThe difference in differences (DID) model and the propensity score matching-difference in differences (PSM-DID) model are both performed to investigate the impact of the medical system on nutrition improvement for the rural elderly. Two thousand seven hundred eighty rural elderly samples tracked in 2000 and 2006 from the China Health and Nutrition Survey are analyzed. Indices for the elderly’s nutrition intake includes daily average intake of energy, fat, protein, and carbohydrate.ResultsThe results show that participation in the NRCMS can significantly increase the rural elderly’s total energy intake, carbohydrate intake, and protein intake by 206.688 kcal, 36.379 g, and 6.979 g, respectively. A more significant impact of the NRCMS on nutrition intake is observed in the central and near-western where economic development is lagging behind. Also, compared to people of 18–60 age group, such impact is statistically more significant in the elderly for the carbohydrate intake.ConclusionsThe NRCMS can improve the rural elderly’s nutrition intake in China. As the population ages rapidly in rural China, the present study provides recommendations on how to improve nutrition and health status of the elderly from the aspect of the medical system.

Does the “Belt and Road Initiative” Promote the Economic Growth of Participating Countries?

With the slowdown of global economic growth, how to stimulate economic growth has become a hot topic in recent years. The “Belt and Road (B&R) Initiative,” as a newly proposed global economic stimulus plan, has attracted widespread attention from scholars. In this study, the research used the propensity score matching difference in difference (PSM-DID) method to evaluate whether the “B&R” Initiative has promoted the economic growth of the countries along the route. Objectively assessing the effect of its implementation is not only important for its completion and improvement in the future but also to verify whether the “B&R” Initiative promotes economic growth in participating countries. A logistic regression is constructed using the statistical data obtained by the World Bank on 110 countries from 2011 to 2016. The results show that the “B&R” Initiative has effectively promoted the rapid growth of the GDP of participating countries but the improvement of per capita GDP growth is not significant. Through the analysis of the selected variables, corresponding policy recommendations are proposed. Moreover, objective proofs are provided to encourage all the countries in the world to participate in the “B&R” Initiative.

Evaluating the Effectiveness of the Health Management Program for the Elderly on Health-Related Quality of Life among Elderly People in China: Findings from the China Health and Retirement Longitudinal Study.

The world’s rapidly aging population brings serious challenges which could be addressed by changes in behaviour and policy that promote good health in older age. However, these cheap and simple interventions are not available in many countries. China is one of the fastest-ageing countries in the world. The health management programs for the elderly in basic public health services was introduced by the government to promote the health of the elderly in China and address the challenges related to ageing. However, the effectiveness of the program is uncertain. So, we use a propensity score matching difference-in-difference (PSM-DID) model to analyse the causal effect of the health management program for the elderly in basic public health services on the health-related quality of life (HRQoL) of the elderly in China. The result shows that the program has improved the physical health of the elderly but has had no significant impact on mental health. Expanding the program to cover mental health could further benefit the HRQoL of the elderly. The program is a cost-effective approach to tackle the challenges of ageing and is a good example for other developing countries facing the same ageing challenges.

Environmental non-governmental organizations and urban environmental governance: Evidence from China

Environmental non-governmental organizations (ENGOs) play an increasingly important role in the process of urban environmental governance, especially in some developing countries such as China. However, existing studies pay little attention to such an issue in China. In this paper, we consider 113 cities in China from the pollution information transparency index (PITI) list released by ENGOs as the treatment group and some other cities as the control group, and use the difference-in-differences (DID) model and propensity score matching DID (PSM-DID) model to explore the role of ENGOs in China's urban environmental governance. The results show that ENGOs play a significantly positive and robust role in China's urban environmental governance. Furthermore, using regression analysis for eastern, central, and western China, we find that the influence of ENGOs exists in eastern and central China rather than in western China. In addition, the results of the Placebo test indicate that the effect of ENGOs shows an upward trend since 2008. We suggest that ENGOs' role should be strengthened in China, and governments at various levels should take into account environmental information released by ENGOs and consider appropriate measures to improve local environment quality using the obtained information.

Self-selection and performance of R&D input of heterogeneous firms: Evidence from China's manufacturing industries

Applying the theories of heterogeneous firms and the propensity score matching difference-in-differences (PSM-DID) method to a rich dataset of Chinese manufacturing firms, this paper examines the self-selection of firm-level R&D input and estimates the net effect of R&D on productivity. The analysis shows that (1) for Chinese manufacturing firms as a whole, R&D input is influenced by firm productivity: more productive firms are more likely to invest in R&D; (2) controlling for the self-selection effect, the net output elasticities of R&D input in one year and two years after R&D input are 3.92% and 5.25%, respectively; (3) although state-owned enterprises (SOEs) are more likely than all other ownership groups to invest in R&D, the R&D input is not productive; (4) although enterprises owned by investors outside of Mainland China are the least likely to invest in R&D, the output elasticity of R&D is more significant and larger in this group than in SOEs and privately owned Chinese firms; and (5) surprisingly, the net effect of R&D is not significant in high-tech industries. Policy implications are derived from the findings.

Diff: Simplifying the Estimation of Difference-in-differences Treatment Effects

In this article, I present the features of the user-written command diff, which estimates difference-in-differences (DID) treatment effects. diff simplifies the DID analysis by allowing the conventional DID setting to be combined with other nonexperimental evaluation methods. The command is equipped with an attractive set of options: the single DID with covariates, the kernel propensity-score matching DID, and the quantile DID. Specific options are included to obtain DID estimation on a repeated cross-section setting and to test the general balancing properties of the model. I illustrate the features of diff using a sample of the dataset from the pioneering implementation of DID by Card and Krueger (1994, American Economic Review 84: 772–793).