A study of the impact of the environmental protection tax on corporate employment: Evidence based on listed companies in polluting industries.

The implementation of the environmental protection tax (EPT) is a crucial step in the tasks of achieving the "double-carbon" objective and fostering comprehensive green economic and social growth. The literature on the effect of EPT policies has focused mainly on environmental effects and economic effects and has rarely paid attention to social effects, such as the impact of such policies on employment. By reference to data regarding pollution-intensive listed companies in China from 2014 to 2022, this article uses the 2018 EPT reform as a quasi-natural experiment to explore the effects of EPT on employment within these industries. The EPT reform is shown to have a significant dampening effect on corporate employment in the pollution industry, a conclusion that continues to hold after a number of robustness tests, including the differences-in-differences-in-differences (DDD) tests, the parallel trend test, the placebo test, and the PSM-DID test. Further analysis shows that the EPT reform suppressed employment in polluting industries mainly through two pathways: the output effect and the factor substitution effect. Moreover, the EPT reform generated more significant disincentives to employment in non-state-owned enterprises, large-scale enterprises, and mining industries. This study's findings can serve as a crucial reference for policies in China that aim to promote high-quality full employment in the context of environmental governance. The results of this research can also serve as a reference for a cost‒benefit analysis of environmental policies in China in terms of employment and provide a theoretical basis for and practical experience regarding the task of coordinating the relationship between environmental governance and employment regulation in China.