The impact of National Forest City Construction on local employment: Evidence from China

The National Forest City Construction (NFCC) initiative aims to improve regional greening levels, optimize ecosystem services, and achieve sustainable development. This policy serves as a key measure to promote eco-friendly urbanization and facilitate coordinated economic development in both urban and rural areas through green transitions. As a comprehensive ecological initiative, the NFCC stimulates local employment through various unexpected channels. This study examines the employment effects of the NFCC using a staggered difference-in-differences (DID) approach, analyzing a panel dataset of 289 prefectures in China from 2002 to 2019. We find that the NFCC increased local employment by an average of 7.08 % in prefectures adopting the policy compared to those without implementation. The policy promotes employment through several mechanisms: (1) stimulating growth in forest-related industries and enhancing business performance, (2) improving the ecological environment to generate indirect job opportunities, and (3) promoting local infrastructure development, which creates additional jobs and attracts skilled workers. Heterogeneity analysis reveals that NFCC benefits extend beyond the primary sector, driving employment growth in manufacturing and service sectors, particularly among private and self-employed workers in forest-rich regions. These findings demonstrate the potential of government-led green initiatives to foster flexible employment opportunities and address job losses in traditional sectors. To maximize long-term benefits, we recommend targeted investments in vocational training and workforce development to align with the demands of the green economy.