{"title":"Environmental regulation and intra-firm wage inequality: A skill premium perspective","authors":"Ruting Huang, Shanshan Duan, Xiyan Li","doi":"10.1016/j.eneco.2025.108679","DOIUrl":null,"url":null,"abstract":"This paper investigates how firms respond to environmental regulations and their impact on the wage gap between skilled and unskilled labor. We employ a difference-in-difference-in-differences estimation strategy based on the dataset of prefecture-level SO<ce:inf loc=\"post\">2</ce:inf> emission reduction targets obtained by the Eleventh Five-Year Plan and firm-level datasets from 2002 to 2008. Results show that more polluted firms undergo a larger wage gap expansion between skilled and unskilled labor. This effect is pronounced among firms located in eastern or highly regulated regions, and those that are labor-intensive. Moreover, further analysis suggests that the gap results from relative wage adjustments rather than from extensive margin or relative migration patterns. Skill-biased technological change is pivotal in increasing the skill premium and bargaining power of skilled workers, driven by the technological biases embedded in environmental regulations. Overall, our findings shed light on environmental regulation policy to safeguard distributional equality.","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"269 1","pages":""},"PeriodicalIF":13.6000,"publicationDate":"2025-06-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Energy Economics","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1016/j.eneco.2025.108679","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
This paper investigates how firms respond to environmental regulations and their impact on the wage gap between skilled and unskilled labor. We employ a difference-in-difference-in-differences estimation strategy based on the dataset of prefecture-level SO2 emission reduction targets obtained by the Eleventh Five-Year Plan and firm-level datasets from 2002 to 2008. Results show that more polluted firms undergo a larger wage gap expansion between skilled and unskilled labor. This effect is pronounced among firms located in eastern or highly regulated regions, and those that are labor-intensive. Moreover, further analysis suggests that the gap results from relative wage adjustments rather than from extensive margin or relative migration patterns. Skill-biased technological change is pivotal in increasing the skill premium and bargaining power of skilled workers, driven by the technological biases embedded in environmental regulations. Overall, our findings shed light on environmental regulation policy to safeguard distributional equality.
期刊介绍:
Energy Economics is a field journal that focuses on energy economics and energy finance. It covers various themes including the exploitation, conversion, and use of energy, markets for energy commodities and derivatives, regulation and taxation, forecasting, environment and climate, international trade, development, and monetary policy. The journal welcomes contributions that utilize diverse methods such as experiments, surveys, econometrics, decomposition, simulation models, equilibrium models, optimization models, and analytical models. It publishes a combination of papers employing different methods to explore a wide range of topics. The journal's replication policy encourages the submission of replication studies, wherein researchers reproduce and extend the key results of original studies while explaining any differences. Energy Economics is indexed and abstracted in several databases including Environmental Abstracts, Fuel and Energy Abstracts, Social Sciences Citation Index, GEOBASE, Social & Behavioral Sciences, Journal of Economic Literature, INSPEC, and more.