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Can environmental regulation solve pollution problems? Theoretical model and empirical research based on the skill premium

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  • Wang, Ailun
  • Hu, Shuo
  • Lin, Boqiang

Abstract

As the most populous country with huge fossil energy consumption, China's employment and environmental problems have attracted worldwide attention. This paper contributes to the existing research by measuring both employment and environmental problems using a two-layer nested dixit-Stiglitz model and taking the skill premium as a mediator to analyze the direct and indirect effects of environmental regulation on environmental pollution. It is found that: (1) the impact of environmental regulation on the skill premium is U-shaped. (2) the impact of environmental regulation on environmental pollution is inverted U-shaped, and the indirect effect through skill premium is significantly negative. (3) the environmental regulations in most parts of China have not reached the level of promoting skill premium and reducing environmental pollution for most of the time. (4) China's skill premium can play a better role in reducing emissions in places with high-coal consumption

Suggested Citation

  • Wang, Ailun & Hu, Shuo & Lin, Boqiang, 2021. "Can environmental regulation solve pollution problems? Theoretical model and empirical research based on the skill premium," Energy Economics, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:eneeco:v:94:y:2021:i:c:s0140988320304084
    DOI: 10.1016/j.eneco.2020.105068
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