Analyzing the impact of environmental regulation on labor demand: A quasi-experiment from Clean Air Action in China

In response to the national air pollution, China implemented the Clean Air Action policy from 2013 to 2017. The vigorous implementation of the policy has ensured that the policy targets have been achieved, and the haze problem has been effectively controlled. To evaluate the policy effect of environmental regulation on labor demand, this paper conducts policy evaluation by designing a quasi-natural experiment. Based on the variations of labor demand in the region dimension (272 cities) and sector dimension (5 major sectors) from 2008 to 2017, the results of the difference-in-difference-in-difference estimation show that: 1) The implementation of Clean Air Action has a significant negative impact on industrial employment. 2) The dynamic shocks are concentrated in the final stage of the policy. 3) Policy effects show heterogeneity in different regions. Since China is in the critical stage of economic transformation, the findings and enlightenment of this paper can be extended to other environmental and climate policies.