Is eco-innovation employment-friendly? Evidence from China

The examination of the balance between job creation and environmental conservation in developing nations has been hindered by a lack of comparable and dependable data. This study delves into the connection between eco-innovation and employment using a unique firm-level dataset encompassing Chinese manufacturing from 2007 to 2011. Our analysis reveals a positive correlation between eco-innovation and employment. Specifically, material-saving and energy-reducing innovations exhibit favourable impacts on employment, while pollution-reducing innovation shows no significant relevance. Moreover, we observe that the effects of eco-innovation vary across industry sectors and are contingent upon firms' characteristics. Notably, a positive relationship with employment is particularly pronounced in heavily polluting, emerging, and high-tech industries. Additionally, our findings highlight two novel mechanisms through which eco-innovation can boost firms' employment: organisational innovation and the enhancement of employee skill structures.