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Who pays for biodiversity risk? Evidence from firm-level labor income shares

Author

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  • Lin, Yongjian
  • Song, Zhicheng

Abstract

This article examines the impact of biodiversity risk on corporate income distribution in China, focusing on corporate labor income shares. We find that biodiversity risk significantly reduces corporate labor income shares, confirming that employees may become targets for risk transfer due to their weaker bargaining power. Mechanism analysis indicates biodiversity risk drives increased investment in equipment and technology, thereby promoting capital deepening and generating a substitution effect on labor inputs. Meanwhile, biodiversity risk hinders corporate internationalization, narrowing market opportunities and further compressing labor income shares. Additionally, government environmental concerns and industry pollution intensity heighten environmental regulatory pressure, amplifying the impact of biodiversity risk. Conversely, analysts leverage governance effects to mitigate this impact. Our research contributes to ecological economics by revealing the risk spillover effects of biodiversity loss to employees. The findings provide policy insights for governments pursuing the dual objectives of improving environmental quality and enhancing socioeconomic benefits.

Suggested Citation

  • Lin, Yongjian & Song, Zhicheng, 2026. "Who pays for biodiversity risk? Evidence from firm-level labor income shares," Economic Analysis and Policy, Elsevier, vol. 90(C), pages 185-199.
    • Handle: RePEc:eee:ecanpo:v:90:y:2026:i:c:p:185-199
    DOI: 10.1016/j.eap.2026.01.024
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    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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