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The Impact and Mechanism of the Creation of China’s Ecological Civilization Building Demonstration Zones on Labor Employment

Author

Listed:
  • Fu Jingwen

    (School of Economics and Management, Northeast Agricultural University, Harbin, Heilongjiang, 150030, China)

  • Shangguan Xiangle

    (School of Economics and Management, Northeast Agricultural University, Harbin, Heilongjiang, 150030, China)

  • Wei Yusha

    (Graduate School of Businesss, University Sains Malaysia, Penang, 11700, Malaysia)

  • Saleem Faiza

    (Graduate School of Businesss, University Sains Malaysia, Penang, 11700, Malaysia)

Abstract

Balancing environmental protection with economic stability is a critical policy challenge worldwide. This article investigates the employment effects of one of China’s flagship green policies, leveraging the staggered rollout of the ecological civilization construction demonstration zones (ECCDZ) as a quasi-natural experiment. Our findings indicate that the designation of an ECCDZ leads to a significant reduction in firm-level employment. The mechanism analysis reveals two primary channels: firms reduce employment in response to both rising environmental compliance costs and a contraction in production scale. Further analysis shows that this adverse employment effect is more pronounced for larger firms, firms in labor- and capital-intensive sectors, firms with poor ESG performance, and those operating under stricter external environmental oversight. Our findings offer important policy implications for navigating green transitions in developing economies.

Suggested Citation

  • Fu Jingwen & Shangguan Xiangle & Wei Yusha & Saleem Faiza, 2025. "The Impact and Mechanism of the Creation of China’s Ecological Civilization Building Demonstration Zones on Labor Employment," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 19(1), pages 1-18.
    • Handle: RePEc:bpj:econoa:v:19:y:2025:i:1:p:18:n:1004
    DOI: 10.1515/econ-2025-0177
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