Do Carbon Markets Create Jobs? Evidence from China’s Regulated Listed Enterprises
DOI:
https://doi.org/10.6981/FEM.202507_6(7).0011Keywords:
Carbon Emissions Trading; Employment; Multi-period DID; Innovation; Total Factor Productivity; Green Finance.Abstract
The coordinated development of the economy, environment, and people’s livelihood is fundamental to sustainable national progress. The carbon emissions trading policy (CET), a market-based instrument for environmental governance, is crucial to emission reduction and green transformation. Therefore, it is vital to investigate how it affects employment, which determines whether ecological preservation and full employment can be accomplished simultaneously. Using panel data of A-share listed companies in Shanghai and Shenzhen from 2011 to 2023, this study employs a multi-period difference-in-differences (DID) model to examine whether China's carbon trading market generates an "employment dividend". The findings demonstrate that CET considerably boosts employment among pilot enterprises, with an average increase of almost 21.9%, as compared to non-pilot firms. The conclusion is supported by a range of robustness tests, such as PSM-DID, staggered DID, two-stage DID, and placebo tests. Mechanism analysis reveals that the policy boosts employment by encouraging company innovation, but total factor productivity exert a negative impact due to labor-substitution effects. Moreover, provincial green finance development significantly strengthens the positive employment effect. Heterogeneity analysis further indicates that the policy impact is more pronounced among small firms, manufacturing enterprises, competitive industries, and capital- or technology-intensive sectors, with more significant effects observed in eastern regions compared to central and western regions. By integrating carbon markets and employment into a unified analytical framework, this study provides empirical evidence and policy insights for achieving carbon neutrality alongside high-quality employment growth.
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