The Role of Environmental Regulation and Technological Innovation in the Employment of Manufacturing Enterprises: Evidence from China

Abstract

With the increasingly severe emission reduction pressures, it is an inevitable choice for China to improve the intensity of environmental regulation. At the same time, the impact of technological innovation on enterprise employment may lead to some new changes under the environmental regulation constraints. However, existing studies have not included environmental regulation into the theoretical framework of technological innovation and enterprise employment, nor has the influencing mechanism of environmental regulation and technological innovation in the employment of manufacturing enterprises been explored. This paper uses the panel data of listed manufacturing companies in the A-share market of Shanghai and Shenzhen from 2011 to 2017 to examine the impact of environmental regulation and technological innovation on the employment of manufacturing enterprises, and explore their influence mechanisms in a theoretical framework based the moderating effect model. The findings demonstrate the following: First, the technological innovation has a positive creative effect on enterprise employment. Second, the impact of environmental regulation on enterprise employment is significantly positive. Third, environmental regulation has a negative moderating effect on the impact of technological innovation on enterprise employment. Finally, the impacts of both environmental regulation and technological innovation on the employment of manufacturing enterprises are heterogeneous across enterprises due to differences in ownership structure, the degree of pollution, and technical density. Therefore, faced with the objective reality that environmental carrying capacity has reached or approached the upper limit, China needs to formulate a differentiated and diversified technological innovation system and environmental protection policy, improve the environmental innovation level of manufacturing enterprises, and form a green development model, which is of great significance for achieving high-quality development and stable employment.