The impact of green finance on labor income share: Evidence from green finance reform and innovation pilot zone

Enhancing the labor income share (LIS) is essential for optimizing the income distribution structure and achieving the goals of Chinese modernization. Through the panel data of Chinese A-share listed enterprises from 2013 to 2022, we construct a multi-period difference-in-differences model to evaluate the effect of the green finance reform and innovation pilot zones (GFRIPZ) on the enterprises’ LIS and its underlying mechanisms. The research results show that: (1) The GFRIPZ significantly increased the LIS of enterprises. And this conclusion still holds after a series of robustness checks. (2) Mechanism analyses indicates that the GFRIPZ primarily enhances the LIS by alleviating enterprises’ financing constraints and increasing operating income. (3) Heterogeneity analyses reveal that, compared to the eastern China and state-owned enterprises, the income effect of GFRIPZ is stronger in the central-western China and non-state-owned enterprises.