Job Destruction or Job Creation?: Evidence from Carbon Emission Trading Policies

Abstract

Based on the panel data of 285 cities in China from 2007 to 2019, this paper constructs a theoretical framework to analyze the employment effect of carbon emission trading policy, and quantitatively evaluates the effectiveness, decomposition effect and influence mechanism of carbon emission trading policy on employment based on PSM-DID method. The study shows that the carbon emissions trading policy has a positive impact on the level of urban employment while producing significant environmental governance effects, and that its positive impact on employment in the pilot cities stems from the negative effect of reducing employment destruction rather than from the positive effect of increasing the job-creating effect. Carbon emissions trading policy promotes employment in the pilot cities through structural transformation effects, specifically through the three paths of green technology innovation, energy structure optimization and industrial structure upgrading. At the same time, the impact of the policy on employment varies significantly across cities of different locations, sizes and resource endowments. The study proposes that the construction of the national carbon market should be accelerated, a market-oriented green technology innovation system should be constructed, the optimization of the energy structure and the upgrading of the industrial structure should be promoted, and training in employment skills should be strengthened. The theoretical analysis of this study provides a theoretical basis for the micro-mechanism of carbon emissions trading policy, and the empirical results provide practical reference for the change of employment structure and the high-quality development of employment.