Does low-carbon policy affect residents’ life satisfaction? Evidence from China

Exploiting the quasi-natural experiment of the construction of low-carbon pilot cities, we evaluate whether environmental regulations improve residents’ life satisfaction. Theoretical analysis hypothesizes that the implementation of the policy has both health and income effects. Empirical analysis shows that the implementation of low-carbon city pilot policies improves residents’ life satisfaction. Specifically, this policy reduces regional environmental pollution, improves the average health level of residents and their family members, reduces medical expenses, and increases the frequency of physical exercise among residents. Further, it promotes green technology advancements in urban enterprises. This increases green total factor productivity and the labor income share, enabling residents to increase their disposable income, and thus, subjective well-being. Meanwhile, the policy has a stronger impact on cities with moderate population sizes, a sizable working-age population, and a higher proportion of residents with lower labor skills. Finally, the policy improves residents’ willingness to pay for environmental governance, reflecting people’s growing needs for a better living environment.