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Income distribution effect of energy marketization reform: Evidence from Chinese enterprises and regions

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  • Dou, Wei
  • Zhang, Shengling
  • Wu, Zihao
  • Ji, Ruibing
  • Hao, Yu

Abstract

Promotion of a fair and low-carbon transition is key to sustainable development. Energy quota trading policies (EQTP) are a crucial experiment in China's energy market reform, but their ability to provide a “dual dividend” of environmental control and income distribution improvement needs additional study. Using 2007–2022 city-level statistics and micro-level data from Chinese listed businesses, this analysis treats the EQTP as a quasi-natural experiment. A staggered DID model is used to evaluate the EQTP's influence on company and regional labor income share (LS). On average, the EQTP boosts firm-level LS by 2.34 %. Mechanism analysis shows that the “substitution effect” and “output effect” drive this growth. However, city-level study shows that the EQTP has no statistically significant influence on regional LS. To tackle this “micro-macro paradox,” the study breaks down LS alterations. The decomposition results demonstrate that the substitution impact inside businesses increases LS most, but negative inter-firm resource allocation and firm exit effects in the aggregation process somewhat counteract this positive effect. Heterogeneity study shows that the EQTP has a greater distributional improvement effect in non-resource-based cities, non-former industrial bases, heavy-pollution industries, and high-tech sectors. This study offers policy ideas for carbon neutrality and factor allocation optimization.

Suggested Citation

  • Dou, Wei & Zhang, Shengling & Wu, Zihao & Ji, Ruibing & Hao, Yu, 2026. "Income distribution effect of energy marketization reform: Evidence from Chinese enterprises and regions," Energy Economics, Elsevier, vol. 153(C).
    • Handle: RePEc:eee:eneeco:v:153:y:2026:i:c:s014098832500903x
    DOI: 10.1016/j.eneco.2025.109073
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