Propensity Score Matching-difference In Difference Research Articles

Does green transportation affect carbon emission efficiency? Evidence from a quasi-experimental study in China

The establishment of a low-carbon transportation system (LCTS) holds prominent importance in advancing modern transportation development and achieving green growth. Employing the LCTS pilot policy as a shock to green transportation construction in China, we investigate its influence on carbon emission efficiency (CEE) using urban panel data from 2006 to 2021. Results based on difference-in-differences (DID) show that LCTS contributes to increasing CEE following such a pilot policy. This finding still holds after we perform a propensity score matching DID method, double machine learning, instrumental variable method, heterogeneous treatment effect, and other robustness checks. Meanwhile, the mediation analysis shows that the increased CEE can be accounted for by spurring green innovation activities. Moreover, the moderation outcomes reveal that FinTech exerts a positive moderating influence on the increased impacts of LCTS on CEE. Heterogeneity analysis shows that LCTS's impact on CEE varies by region and development level. Overall, our research stresses the importance of green transportation construction in shaping CEE, which has significant practical and theoretical implications for scholars and policymakers.

ESG and firm performance: do stakeholder engagement, financial constraints and religiosity matter?

PurposeThis study revisits the relationship between environmental, social and governance (ESG) activities and firm performance. More importantly, it tests whether this relationship is moderated by critical yet underexplored factors such as stakeholder engagement, financial constraints, and religiosity.Design/methodology/approachA wide range of estimation techniques, including pooled ordinary least squares (OLS), fixed effects, system generalized method of moments (GMM) and propensity score matching-difference-in-differences (PSM-DiD), are employed to investigate such issues in a large sample of firms from 31 countries.FindingsESG performance has a positive and significant impact on firm performance. While stakeholder engagement positively moderates this relationship, financial constraints and religiosity negatively moderate it. Interestingly, this positive linkage is driven by environmental and social performance rather than governance performance.Practical implicationsFirms should proactively engage in ESG initiatives and consider the intervening influences of stakeholder engagement, financial constraints and religiosity in making decisions to invest in ESG activities. Furthermore, our findings can help policymakers understand the financial consequences of ESG practices, which can be helpful in designing new policies to further promote corporate engagement in ESG practices.Originality/valueFirst, our research findings help reconcile the long-standing debate about the value impact of ESG. Second, our paper investigates relatively new aspects of the ESG-firm performance relationship. Third, our study offers more insight into the ESG literature by showing that not all ESG dimensions equally impact firm performance.

Do regional tax incentive policies improve productivity?

The difficulty in transforming old industrial areas constitutes a significant factor contributing to regional development imbalances. Can regional tax incentives, as a crucial component of regional policies, polish the "rust belt" regions? This study leverages the inaugural Value-Added Tax (VAT) reform in China as an opportunity to explore the potential of regional tax incentives in achieving sustainable development in traditional industrial areas. Drawing upon a comprehensive industrial enterprise database, we employ a Propensity Score Matching-Difference in Differences (PSM-DID) approach to examine the efficacy of these tax incentives. Our findings reveal that: (1) Regional tax incentives primarily enhance firms productivity by stimulating investment in enterprises, yet they do not contribute to improved investment efficiency or spur innovation within firms. (2) Regional tax incentives have alleviated financing constraints for enterprises in old industrial bases, significantly enhancing the Total Factor Productivity (TFP) of firms with higher financing constraints. This policy has had an even stronger impact on improving the TFP of state-owned and monopolistic enterprises. (3) Regional tax incentives have impeded productivity growth by preventing the exit of low-efficiency firms and the entry of high-efficiency ones. These incentives also increased the likelihood of "zombie firms" forming and failed to promote endogenous economic growth in the Northeast region. Additionally, they have distorted the allocation of resources towards capital and technology-intensive industries in that area. In China's old industrial bases, regional tax incentives should be coordinated with market-oriented reforms; these regional tax incentive policies should also be further enriched.

Trade and energy efficiency: theory and evidence

PurposeSome existing studies have begun to discuss how trade will change the environment from a country or province perspective. However, so far, only a limited number of studies have provided evidence at the product level. This study aims to investigate the environmental impacts of trade at the product level.Design/methodology/approachThe effects of importing intermediates and capital inputs on energy performance are examined using theoretical analysis. Empirical analyses are conducted using data on product trade, and the effects of importing intermediate inputs and capital inputs on energy efficiency are identified using a Propensity Score Matching-Difference in Difference (PSM-DID) estimation.FindingsThe results demonstrate that importing intermediates and capital inputs effectively enhance energy efficiency. Importing these inputs from foreign markets leads to increased productivity and ultimately improves energy performance.Originality/valueThis research provides new evidence on the relationship between importing and energy use at the product trade level. It offers insights into enterprise behaviors regarding importing intermediates and capital inputs, contributing to a deeper understanding of the environmental effects of trade. Additionally, a micro-theoretical model is developed to examine the impacts of imports on energy efficiency, complementing existing literature with theoretical insights.

Polluting industries: Does green industrial policy encourage green innovation? Chinese perspective evidence

This study investigates the efficacy of green industrial policies in stimulating green innovation within China's polluting industries, over the period 2011–2022. Focusing on 30 provinces, we assess the dynamic relationship between green industrial policy implementation and innovation in environmentally detrimental sectors. Employing Difference-in-Differences (DID) and Propensity Score Matching DID (PSM-DID) models, we analyze comprehensive provincial-level data to quantify the impact of policy measures on green technological advancements. The results reveal a significant positive correlation between green industrial policies and the rate of green innovation, particularly in regions with higher pollution levels. These findings suggest that well-structured green industrial policies can serve as effective catalysts for fostering sustainable technological innovations in polluting industries. Policy implications highlight the necessity of targeted, region-specific approaches to maximize the potential of green industrial policies in promoting environmental sustainability and economic growth.

China's Low-carbon city policy and manufacturing firms' servitization: Do environmental regulations matterʔ

Manufacturing servitization is an effective way to improve both environmental performance and economic benefits in developing countries. In this paper, we first propose the firm-level manufacturing servitization (FMS) measurement method. Then, based on Chinese firm-level data for 2000–2015, we take low-carbon city pilot (LCCP) policy implementation as a quasi-natural experiment to investigate the effect of low-carbon city governance on FMS. The propensity score matching-difference-in-differences (PSM-DID) model results indicate that the construction of LCCP policy could significantly improve FMS. In addition, we explain the promoting effect of low-carbon city governance on FMS by enhancing innovation intensity and promoting pollution factor substitution. Specifically, low-carbon city governance increases the innovation intensity of enterprises and promotes service factors as substitutes for other pollution production factors, changing the service factor input structure. Furthermore, by dynamically decomposing aggregate FMS growth, we found that LCCP policy generates a positive within-firm effect for surviving enterprises. However, the role of the resource reallocation effect has not been fully explored. Based on the findings, this study offers more theoretical backing and empirical substantiation for developing countries' pursuit of simultaneously achieving sustainability and economic growth under environmental regulations.

Does internet use benefit health?-PSM-DID evidence from China's CHARLS.

Amid the increasing global internet penetration, understanding the impact of internet use on residents' health is crucial. This aids in formulating more effective health policies and provides empirical evidence for promoting health equity and improving overall public health. Drawing on the China Health and Retirement Longitudinal Study (CHARLS), this paper employs the Propensity Score Matching-Difference in Differences (PSM-DID) method to examine the impact of the internet on individual health and further explores the pathways through which the internet affects health. We introduce the research background and significance in the introduction. Then, in the theoretical analysis, it incorporates internet variables into the Becker health demand model to analyze changes in health demand and impact pathways. The empirical analysis tests the theoretical findings, leading to empirical results. Finally, the study discusses the results and provides relevant recommendations. The findings indicate significant positive effects of the internet on both physical and psychological health. These effects are realized through reducing health information asymmetry, lowering health costs, and increasing exposure to health-promoting environments. In the heterogeneity analysis, economic-related internet content shows a significant positive impact on resident health. Intensive internet use adversely affects psychological health. The beneficial effects of the internet on health are more pronounced among older individuals, those covered by medical insurance, and regions with higher levels of digital economy. Based on these findings, the study offers policy recommendations concerning individuals' internet use patterns, the digital evolution of the healthcare industry, and government infrastructure development.

Does energy-consuming rights trading policy achieve urban pollution and carbon reduction? A quasi-natural experiment from China

Energy-consuming rights trading (ECRT) policy represents a critical policy instrument for China striving to achieve its “dual carbon” objectives, captivating significant attention for its potential to reduce pollution and carbon emissions. This study utilizes panel data from 290 Chinese cities spanning 2010 to 2021, leveraging the ECRT policy as a quasi-natural experiment. Employing Difference-in-Differences (DID) and Propensity Score Matching-Difference-in-Differences (PSM-DID) methodologies, we assess the effect of the ECRT policy on urban pollution and carbon reduction levels. The findings indicate: 1) Relative to non-demonstration cities, the ECRT policy significantly enhances pollution and carbon reduction levels in demonstration cities; this conclusion remains robust after rigorous testing. 2) Heterogeneity analysis indicates that the policy’s effect on pollution and carbon reduction is more significant in the central and western regions, and particularly evident in key and resource-based cities. 3) Mechanism tests demonstrate that the policy facilitates urban pollution and carbon reduction by cultivating green technological innovation and industrial structure upgrading. Therefore, to further advance the ECRT policy, it is necessary to expand the breadth, depth, and flexibility of policy implementation, while also optimizing environmental regulations to fully leverage the system’s potential in enhancing urban pollution and carbon emissions.

The impact of energy use rights trading policy on industrial companies’ green investments –Evidence from a quasi-natural experiment in China

As the world's largest energy consumer, China's energy strategy is of great significance in achieving a low-carbon economy for the world. Among the various pathways towards a low-carbon economy, green investment represents a pivotal element. In contrast to traditional investment, which tends to undervalue externalities, green investment considers both economic and environmental effects. This multifunctional approach necessitates the implementation of effective environmental regulation to stimulate green investment. In 2015, China initiated a pilot energy use rights trading policy, offering a quasi-natural experiment in policy for corporate green investment. This paper examines the impact of China's energy use rights trading policy on increasing green investment by Chinese industrial companies. The aim is to provide a valuable reference for the promotion of increased green investment by industrial companies in China and other major economies. The paper empirically examines the micro-economies under the method of multi-period difference-in-differences, taking 4037 observations of 1166 A-share listed industrial companies in China as the research sample from 2013 to 2021, sourced from the Wind database and hand-collected financial statements. It is found that (1) the energy use rights trading policy can significantly promote Chinese industrial companies to increase green investment. (2) After controlling for companies' relevant financial data and undergoing a series of robustness tests, including the placebo test and the propensity score matching difference-in-difference (PSM-DID) test, our main findings remain significant and robust. (3) The heterogeneity results show that the energy use rights trading policy has a more significant role in promoting the increase of green investment in non-state-owned companies, companies in the central region, and companies in high energy-consuming industries.(4) In terms of mechanism analysis, we demonstrate that energy use rights trading policy can promote an increase in green investments by increasing the environmental responsibility index in companies’ ESG ratings.

Can digital transformation curtail carbon emissions? Evidence from a quasi-natural experiment

Digital infrastructure construction (DIC) is a crucial component of digital transformation, yet its impact on the sustainable development of cities remains uncertain. To address this question, this study employs the Difference-in-Differences (DID) model to evaluate the effects of a typical DIC policy, the Broadband China Pilot (BBCP) policy. The research sample covers data from Chinese cities from 2009 to 2019. The DID estimation demonstrates that the BBCP policy effectively decreased carbon emissions (COE). Robustness tests, such as parallel trend tests, placebo tests, propensity score matching DID, and local projection DID, all confirm the negative impact of the BBCP policy on COE. Heterogeneity analysis reveals that the BBCP policy has a greater mitigation effect on COE in non-resource cities. The BBCP policy has a stronger effect on reducing the COE in cities with a higher proportion of green funds or lower fiscal expenditures. Further analysis indicates that the BBCP policy significantly improves low-carbon ecological efficiency and reduces COE intensity. The results of the mechanism analysis reveal that the BBCP policy lowers COE by enhancing the industrial structure and promoting green technological progress. The study provides policy recommendations in the realm of DIC for developing countries to achieve digital transformation and low COE development concurrently. This research can assist governments in better considering how to implement DIC policies to construct ecologically sustainable cities with low COE.

The impact of green credit legislation on business financing: Insights from Chinese polluting firms

Introducing sustainable credit protection by companies depends on eco-friendly funding that accelerate businesses' technical development and transformation. This study investigates the sustainable financing roles through green credit legislation which impacted state owned enterprises and non state owned enterprises. We have investigated our hypothesis using the Propensity Score Matching Difference-in-Differences (PSM-DID) model. For this purpose we collected data of businesses listed on the Shanghai and Shenzhen stock exchanges that are country's most polluting publicly listed enterprises between 2009 and 2021. The results of the study reveals that liquid Finance and industrial Credit experienced a meteoric rise while the use of illiquid debt financing has dropped significantly among highly polluting organizations. This pattern has intensified after China introduced its “sustainable credit guidelines.” Additionally, businesses in areas with lower sustainable development indices are more likely to feel the consequences of sustainable credit programs. However, there is still a need for prudent capital flow allocation in response to the personalized financing preferences resulting from the sustainable credit policy at the business level, even if China's sustainable credit rules have unquestionably reduced the use of illiquid debt financing by severely polluting enterprises. Policy implications include improving the direction signalled to these businesses via sustainable funding.

How does green credit guidelines affect environmentally friendly enterprises' ESG? A quasi-natural experiment from China.

Following decades of extensive economic development, promoting the transition to greening and decarbonization in economic development have become inevitable choices for controlling environmental pollution and achieving high-quality development in China. Green Credit Guidelines (NIGCG) is a major policy innovation to promote green credit and further improve sustainable economic development. The influence of these guidelines on environmentally friendly enterprises' sustainable development capacity, proxied by environmental, social, and corporate governance (ESG), has not yet been discussed. Therefore, this study takes the NIGCG issued in 2012 as a quasi-natural experiment, and adopts a propensity score matching-difference-in-differences (PSM-DID) model to test whether the NIGCG has affected ESG in environmentally friendly enterprises from 2009 to 2022. Our results indicate that the NIGCG significantly boosts environmentally friendly enterprises' ESG, and this finding remains robust to a series of tests. In addition, a mediating effect analysis reveals that the NIGCG affects enterprises' ESG through research and development (R&D) investment, verifying the Porter hypothesis in China. Finally, we determine that the role of NIGCG in promoting ESG is significantly reflected in the non-politically connected enterprises and enterprises in the eastern region. The empirical results suggest that the authorities should stimulate enterprises' R&D investments through supporting policies, such as tax reimbursement and government subsidies, and formulate differentiated policies according to the characteristics of enterprises and their regions, so as to improve the effect of NIGCG.

The Impact of Rural–Urban Student Mobility on the Efficiency of Resource Allocation in China’s Rural Households: Optimization or Distortion?

The impact of rural-urban student mobility on the efficiency of resource allocation in China’s rural households is crucial for refining policies related to rural migrant settlement and the balanced allocation of urban and rural educational resources. Drawing on theoretical insights, this study employs a mixed methods approach—primarily qualitative, with quantitative support—to empirically test the impact of rural-urban student mobility on the resource allocation efficiency of rural households in China. Utilizing micro-survey data from China Family Panel Studies (CFPS), this study applies ordinary least squares (OLS) models, propensity score matching difference-in-differences (PSM-DID) models, and endogenous switching regression (ESR) models to ascertain the direction of this impact. Furthermore, this study incorporates in-depth interview data gathered from field research in D County to explore the dynamic mechanisms of resource allocation adjustments within these households. The results show that rural-urban student mobility significantly reduces the efficiency of labor resource allocation and agricultural production in China’s rural households. The impact is heterogeneous across different groups, most negatively affecting households with limited labor resources, lower educational levels, lower incomes, more productive fixed assets, and less self-owned land. Mobility leads to suboptimal occupational choices, resulting in decreased labor resource efficiency. Additionally, it distorts agricultural production by leading to labor loss, reduced investments in agricultural productivity, and misaligned land allocation decisions.

Cross-regional integration of renewable energy and corporate carbon emissions: Evidence from China's cross-regional surplus renewable energy spot trading pilot

Using data from A-share listed renewable energy enterprises, this study constructs a quasi-natural experiment with China's Cross-regional Surplus Renewable Energy Spot Trading Pilot policies as the shock and explores its impact on corporate carbon emissions from 2014 to 2021 using the staggered difference-in-differences (DID) model. The results indicate that the Cross-regional Surplus Renewable Energy Spot Trading Pilot can significantly reduce the carbon emissions of renewable energy enterprises in pilot regions during the sample period, demonstrating heterogeneity in regional location, ownership, and corporate social responsibility. The positive effect of the pilot is more pronounced for enterprises in the central region, state-owned enterprises, and enterprises with a high sense of social responsibility. The results remained robust when we applied propensity score matching DID, difference-in-differences-in-differences (DDD), placebo tests, alternative measures and 2SLS instrumental variable tests to further eliminate the interference from other factors. Moreover, in terms of mechanisms, the Cross-regional Surplus Renewable Energy Spot Trading Pilot can reduce corporate carbon emissions by promoting renewable energy consumption and corporate energy efficiency. This study enhances understanding of cross-regional renewable energy integration, expanding discussions on selecting trajectories for energy efficiency and emissions reduction goals in the energy sector. Our findings offer practical examples of how different regions and countries promote the integration of renewable energy markets, thereby contributing to research on renewable energy integration.

Risk mitigation strategies in urban investment bonds: Insights from local government implicit debt governance

Growing concerns surrounding urban investment bond (UIB) defaults in China necessitate a thorough examination of risk mitigation strategies. This study investigates the impact of local government implicit debt governance on UIB credit risk using a propensity score matching difference-in-differences (PSM-DID) approach. Our findings reveal that effective debt governance significantly reduces UIB credit risk, particularly for bonds issued by local government financing vehicles (LGFVs) with “high bargaining power”. However, financial technology development may obscure credit risks and dampen the positive effects of governance. Further analysis, grounded in the “financial potential energy” framework, highlights the mediating roles of asset extension and risk warranty. Comparing the 2014 "Document No. 43" with the 2018 debt governance policy, we find the latter to be more effective in mitigating UIB credit risk. This study offers valuable insights into the micro-level effects of local government debt governance and provides guidance for policymakers in managing credit risks.

Impact of ISO 14000 on Energy Intensity of Manufacturing Plants in India

Using plant-level data for 2008-2017, we examine the impact of the adoption of ISO 14000 by Indian manufacturing plants on their energy intensity. The propensity-score-matching difference-in-difference (PSM-DID) estimator is used to assess the effect. Our results show that the adoption of ISO 14000 tends to reduce energy intensity in Indian manufacturing plants, especially among the low and low-medium technology industries. ISO 14000 lowers energy intensity in industrial plants in energy-intensive industries, and the effect is stronger for the group of such industries covered under the Perform–Achieve–Trade (PAT) scheme of the Indian government, a market-based compliance mechanism for energy efficiency improvement.

Enhancing children's nutrition: the influence of rural household technology under China's home appliances going to the countryside policy.

This study explores the influence of household technological advancements on children's nutritional intake, specifically within the context of the Chinese government's "Home Appliances Going to the Countryside" (HAGC) initiative. Utilizing data from the China Health and Nutrition Surveys of 2006, 2009, and 2011, we employed a Propensity Score Matching Difference-in-Differences (PSM-DID) framework to ascertain the repercussions of enhanced household technology on the dynamics of children's nutritional consumption patterns. Our analysis reveals that the HAGC-inspired integration of household appliances, including color televisions, washing machines, and refrigerators, has beneficially reshaped the nutritional consumption patterns of children, with a pronounced effect among female children. This finding remains consistent even when employing alternate methodological robustness tests. A deeper examination of the HAGC policy's mechanisms underscores the pivotal roles of parental time allocation, improved food storage capabilities, and augmented information accessibility as significant drivers bolstering children's nutritional intake. These insights bear considerable significance for strategizing interventions aimed at elevating the nutritional wellbeing of children in rural settings, offering valuable input for shaping public health policies tailored for such demographies.

How an emission trading system affects carbon emissions? Evidence from the urban agglomeration in the Middle Reaches of the Yangtze River, China

The emission trading system (ETS) is one of the important policy instruments that help to achieve the “double carbon” goals, however, how the ETS affects the carbon emissions for an urban agglomeration remains uncertain. This study aims to explore the ETS’s impacts to carbon emission intensity (CEI) in Urban Agglomeration in the Middle Reaches of the Yangtze River (UAMRYR) of China during 2006–2018. By using the Difference-in-Differences (DID) model, the positive effects of ETS to CEI reduction were confirmed, and the robustness of findings were proved via the parallel trend test, placebo test, and propensity score matching DID (PSM-DID) method. This study also recognized two mediation impacting paths, which were economic intensity improvement and green technology innovation, and provided the evidence that the ETS could further reduce the CEI through improving the economic intensity as well as the green technology innovation. Furthermore, the study investigated the heterogeneous impacts from ETS by dividing the cities within the agglomeration into different orientations. The ETS performed better in the edge cities, and the same phenomenon occurred when considering the mediation effect from economic intensity. Policy recommendations about ETS were also provided.

Balancing Acts: Unveiling the Dynamics of Revitalization Policies in China’s Old Revolutionary Areas of Gannan

A series of revitalization policies (RPs) have been implemented in China’s Old Revolutionary Areas (ORAs). Evaluating the impact of these RPs is of paramount importance for refining policy design and achieving the goal of common prosperity. This study focuses on the ORAs in Gannan (ORAG) and employs the Propensity Score Matching Difference-in-Differences (PSM-DID) method to assess the effects of the RPs from two perspectives: stimulating economic growth and increasing farmers’ income, utilizing county-level data spanning from 2006 to 2019. The findings of this study reveal that while the RP restrains the growth of per capita GDP in ORAG, it significantly promotes the growth of farmers’ income. Moreover, it plays a crucial role in reducing the income gap between ORAG and Jiangxi Province, thus promoting the common prosperity of farmers in ORAG. A detailed examination using quantile regression shows that the RP has a significant and consistent negative impact on GDP per capita GDP at different quantile points. At the same time, it has a significant positive effect on increasing farmers’ income at the 25% quantile point, effectively reducing income inequality among farmers at all quantile levels. The mechanism analysis shows that the RP has stimulated increased government investment in ORAG, leading to an increase in farmers’ incomes and a reduction in income disparities. However, the study also highlights the existence of a “policy trap” that has hindered the RP’s effectiveness in ORAG. Drawing upon these findings, this paper offers policy recommendations to enhance the impact of RP in ORAs.

The Impact of Low-Carbon City Pilot Policies on Green Innovation Efficiency in Chinese Cities: An Empirical Analysis Based on the Multi-Period PSM-DID Model

On the basis of panel data taken from 226 Chinese cities in the period 2008 to 2019, this paper measures urban green innovation efficiency, with the help of the unexpected production output-stochastic block model (UPO-SBM), and applies the propensity score matching difference-in-differences (PSM-DID) model to analyze the impact of low-carbon city pilot policies (LCPP) on urban green innovation efficiency. This paper also applies a mediation effect model to analyze the mechanism of the LCPP that enhances urban green innovation efficiency, and also attempts to explore the impact of the LCPP on the green innovation efficiency of various types of cities by engaging with multiple dimensions. The results of the study shows that: (1) When all other conditions remain unchanged, the average promotion effect of the implementation of the LCPP on urban green innovation efficiency is 21.77%; (2) at 1% significance level, the mediating effect of financial technology R&D expenditure and environmental governance expenditure is 0.0664 and 0.0283, respectively, confirming that both are important to the role that LCPP plays; (3) at 5% significance level, the exogenous policy effect of the LCPP on urban green innovation efficiency is more obvious in cities with a larger population size and higher degree of development, whose pillar industry is heavy industry.