The employment effect of enterprises embedded in global value chains (GVCs) has important theoretical value, but existing research has ignored the impact of environmental costs on employment under the division of labor system within the value chain. By constructing a GVC-embedded index considering environmental costs, this study investigates the impact of Chinese industrial enterprises’ embedding into GVCs on employment at both the theoretical and empirical levels. It is found that when the environmental cost is considered, the improvement of GVC embeddedness has a significant inhibiting effect on employment, especially for female laborers, lower-skilled laborers, state-owned enterprises, private enterprises, and enterprises in the eastern region of China. The research also shows that when considering environmental costs, the labor cost increase effect enhances the negative effect of increased GVC embeddedness on employment, while the innovation promotion effect and the foreign direct investment effect serve to mitigate the negative effect. The results provide a reference for developing countries seeking to effectively protect people’s livelihood and employment while achieving a leap in the division of labor along the green value chain.
