How Does Clean Heating Policy Affect Employment in Local and Neighboring Cities: Spatial Quasi-experimental Evidence from China

Abstract

Clean energy development and employment promotion are two essential Sustainable Development Goals (SDGs) adopted by the United Nations. However, limited evidence exists on how industrial energy transition policies impact employment at the city level. This research uses exogenous changes in clean heating intensity resulting from the implementation of a clean heating policy, as a quasi-natural experiment. Using a Continuous Spatial Difference-in-Difference (CSDID) model, it examines the direct and spillover effects of the clean heating transition on employment in 130 cities across northern China. The results show that the clean heating transition can significantly increase the total employment in both the local city and nearby cities. Direct effects are most pronounced in the tertiary industry, while spillover effects are concentrated in the secondary industry. These effects are driven through three key channels: air quality control, capital substitution, and technology innovation. Notably, the impacts of clean heating transformation on employment have shown significant heterogeneity based on a city’s geographic location (eastern vs. central), marketization level, foreign investment levels, and the extent of clean energy use in the heating sector. These findings provide policy implications for achieving sustainable development goals in the context of industrial energy transitions.