Research on the relationship between environmental regulation, technological innovation and employment: focused on China

Abstract

Purpose – The purpose of this paper is to explore the relationship between formal environmental regulation (FER) and informal environmental regulation (IER), technological innovation and employment. Design/methodology/approach – This paper uses data from the 30 provinces of China during 2003–2015. The impacts of formal and IER and technological innovation on employment are estimated by generalized least squares, and the eastern region of China is analyzed separately. Findings – First, both formal and IERs have different degrees of significant impact on employment, and the relationship is not a simple linear. FER has an inverted U-shaped relationship with employment, but IER has a U-shaped relationship. However, in the test including technological innovation, the results of the national sample and the eastern sample are different. In the eastern sample, the relationship between informal regulation and employment has an inverted U-shaped curve. Second, the results of model 3 and model 6 show that technological innovation has a significant negative effect on employment both in the national and the eastern region sample. Research limitations/implications – This paper puts forward corresponding policy implications: first, in designing environmental regulations, it is necessary to consider not only the stringency but also the type of regulation. Second, environmental regulations need to be differentiated by region. Finally, when designing environmental regulations, it is necessary to consider more flexible employment policies that are contingent on the stringency of regulations, in order to prevent employment decline due to technological innovations. Originality/value – The conclusions about the influence of environmental regulation on employment reached are not consistent in China. Most existing research studies seldom consider environmental regulations into categories and focus only on the whole environmental regulation. This paper pays attention to the influences of different types of environmental regulations on employment. It analyzes the eastern region separately to explore whether there is a difference in the effects of environmental regulations. Furthermore, this considers the effect of technological innovation as a mediator.

Keywords

• Environmental regulations
• Employment
• Technological innovation
• Non-linear effect