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Abstract

Whether environmental regulation can increase employment is still controversial in academic circles around the world. An important reason lies in the validity of an empirical method. Using China’s inter-provincial panel data from 2003 to 2015 and the synthetic control method (SCM), this paper focuses on a test that was carried out on the basis of a quasinatural experiment of the 2007 Emission Trading Pilot (ETP) policy. The test results show that the ETP policy has increased the average employment level by 3.25 percentage points and passed a robustness test. The robustness test using the regression control method (RCM) shows that the average employment level has risen by 3.21 percentage points. This means that the ETP policy has significantly increased employment. The paper also puts forward three policy recommendations: optimizing the trading system for emissions rights, encouraging companies to carry out cleaner production and innovation, and incorporating environmental performance assessments

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