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Research on the Impact of Environmental Regulations on Industrial Green Total Factor Productivity: Perspectives on the Changes in the Allocation Ratio of Factors among Different Industries

Author

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  • Jiaqi Yuan

    (School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China)

  • Deyuan Zhang

    (Institute of Economic System and Management, Academy of Macroeconomic Research, National Development and Reform Commission, Beijing 100035, China)

Abstract

This paper constructs a two-sector manufacturer model of endogenous technological progress. We analyze the impact of environmental regulations on the factor input and output of different industries. Then, we reveal the intermediary role of inter-industry factor allocation in the impact of environmental regulations on industrial green total factor productivity (GTFP). Finally, the paper uses panel data from 30 provinces in China’s industry from 2000 to 2017 to conduct empirical tests. We can draw the following conclusions: (1) The relative magnitude of the output compensation of the production department and the innovation compensation of the R&D department could change the impact of environmental regulations on the input and output of inter-industry factors, and the comprehensive effects of both input and output will affect the level of GTFP. (2) The curve of the direct impact of environmental regulations on GTFP is in an inverted “U” shape. However, the production factor allocation ratio can “reverse” the inhibitory effect of high-intensity regulations on GTFP. (3) The capital factor has a greater impact on the regulatory effect, but the labor factor has a more lasting impact on the regulatory effect. High-strength environmental regulations can enhance manufacturers’ preference for human capital. Therefore, formulating environmental regulatory policies oriented to improve the ratio of factor allocation, mixing different types of regulatory policies, and increasing investment in human capital are all conducive to accelerating the transformation and upgrading of China’s industrial structure and achieving high-quality development of the industrial economy.

Suggested Citation

  • Jiaqi Yuan & Deyuan Zhang, 2021. "Research on the Impact of Environmental Regulations on Industrial Green Total Factor Productivity: Perspectives on the Changes in the Allocation Ratio of Factors among Different Industries," Sustainability, MDPI, vol. 13(23), pages 1-23, November.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:23:p:12947-:d:685676
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    References listed on IDEAS

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    1. Fernando Broner & Paula Bustos & Vasco Carvalho, 2011. "Sources of comparative advantage in polluting industries," Economics Working Papers 1331, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2019.
    2. Hering, Laura & Poncet, Sandra, 2014. "Environmental policy and exports: Evidence from Chinese cities," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 296-318.
    3. Wang, Yan & Shen, Neng, 2016. "Environmental regulation and environmental productivity: The case of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 758-766.
    4. Harberger, Arnold C, 1998. "A Vision of the Growth Process," American Economic Review, American Economic Association, vol. 88(1), pages 1-32, March.
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    Cited by:

    1. Wei Qian & Yongsheng Wang, 2022. "How Do Rising Labor Costs Affect Green Total Factor Productivity? Based on the Industrial Intelligence Perspective," Sustainability, MDPI, vol. 14(20), pages 1-19, October.
    2. Li Wang & Jinyang Tang & Mengqian Tang & Mengying Su & Lili Guo, 2022. "Scale of Operation, Financial Support, and Agricultural Green Total Factor Productivity: Evidence from China," IJERPH, MDPI, vol. 19(15), pages 1-18, July.
    3. Xu He & Qin-Lei Jing, 2022. "The Impact of Environmental Tax Reform on Total Factor Productivity of Heavy-Polluting Firms Based on a Dual Perspective of Technological Innovation and Capital Allocation," Sustainability, MDPI, vol. 14(22), pages 1-17, November.
    4. Jinhuang Mao & Qiong Wu & Meihong Zhu & Chengpeng Lu, 2022. "Effects of Environmental Regulation on Green Total Factor Productivity: An Evidence from the Yellow River Basin, China," Sustainability, MDPI, vol. 14(4), pages 1-21, February.
    5. Xu Dong & Yang Chen & Qinqin Zhuang & Yali Yang & Xiaomeng Zhao, 2022. "Agglomeration of Productive Services, Industrial Structure Upgrading and Green Total Factor Productivity: An Empirical Analysis Based on 68 Prefectural-Level-and-Above Cities in the Yellow River Basin," IJERPH, MDPI, vol. 19(18), pages 1-19, September.

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