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Labor protection and firm carbon emissions: Evidence from a quasi-natural experiment

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Listed:
  • Li, Yixian
  • Ni, Xiaoran
  • Ouyang, Wenpei
  • Xu, Jin

Abstract

This paper exploits the staggered adoption of the Worker Adjustment and Retraining Notification (WARN) Act across U.S. states as a quasi-natural experiment to explore the impact of enhanced labor protection on corporate carbon emissions. Estimation results indicate that strengthening labor protection significantly increases carbon emissions. This effect is more pronounced in firms that are more exposed to layoffs and have greater financial strength. Our evidence suggests that the increased social costs due to stronger labor protections may discourage firms’ green transition.

Suggested Citation

  • Li, Yixian & Ni, Xiaoran & Ouyang, Wenpei & Xu, Jin, 2026. "Labor protection and firm carbon emissions: Evidence from a quasi-natural experiment," Finance Research Letters, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:finlet:v:88:y:2026:i:c:s1544612325023931
    DOI: 10.1016/j.frl.2025.109144
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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