Low-carbon transition policy and employment structure: Evidence from China’s Low-carbon City Pilot

Abstract

The differentiated constraints imposed by the low-carbon transition policy on various carbon-intensive industries inevitably affect the allocation of labor resources. However, existing research on the impact of this policy on employment structure, especially from the perspective of different carbon-intensive industries, remains to be further developed. This study treats China’s Low-carbon City Pilot (LCCP) policy as a representation of the low-carbon transition policy, uses data from a sample of Chinese cities from 2003 to 2020, and applies the difference-in-differences with multiple time periods model to examine the impact of the low-carbon transition policy on the employment structure. The results robustly show that the low-carbon transition policy has increased employment in both low-carbon and high-carbon industries, with employment in high-carbon industries rising faster than in low-carbon industries. Mechanism tests reveal that the policy affects the employment structure primarily through low-carbon technological innovation and changes in the market structure resulting from firm entry and exit. Compared to low-carbon industries, the low-carbon transition policy has significantly promoted low-carbon technological innovation in high-carbon industries, and it has attracted more high-carbon industry firms into the market, inducing changes in the market structure, both of which have contributed to changes in the employment structure. Heterogeneity analysis shows that in cities with higher per capita income, lower carbon emissions, stronger regulation, and higher public concern for low-carbon issues, the policy’s impact on increasing employment in low-carbon industries is more significant than in high-carbon industries. Based on these findings, this study offers policy recommendations to accelerate the development of a low-carbon industrial system, improve the LCCP policy implementation mechanism, and facilitate the free flow of labor and other resources.