Under the dual pressure of environment and employment, it has been a hot topic whether government departments can achieve the double dividend of "environmental improvement" and "employment promotion" via reasonable market-based environmental regulation. In light of the exogenous policy event of the carbon emission trading scheme (ETS), this study investigates the impact of ETS on the corporate labor investment efficiency of a sample of industrial companies listed in China's A-share from 2007 to 2020. The study reveals that the ETS can significantly improve corporate labor investment efficiency. Further research finds that the promotion of green technology innovation and alleviation of financing constraints as crucial mechanisms by which ETS affects corporate labor investment efficiency; the ETS improves the corporate labor investment efficiency more significantly in enterprises with a lower marketization degree, lower labor intensity, and non-state-owned enterprises. The improvement of labor investment efficiency by the ETS is associated with the amelioration of labor under-investment and suppression of over-investment. Furthermore, the improvement of labor investment efficiency by the ETS can enhance enterprises' productivity. In light of these findings, this study provides suggestions for the improvement of ETS from the microscopic perspective of firms and offers ideas for the improvement of corporate labor investment efficiency.
Keywords: Carbon emission trading scheme (ETS); Corporate labor investment efficiency; Financing constraints; Green technology innovation.
© 2023. The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.