In China, “the cessation of the most polluting activities leads to layoffs and has a negative impact on wages”

Lchina is, along with the United States, one of the two countries that contribute the most to the environmental crisis, through its economic growth. However, it has not remained inactive in terms of the fight against pollution: since 1987 and the law of control and prevention of air pollution, the Chinese government has continued to strengthen its environmental regulations.

At first, the results of this policy were very disappointing. For example, despite the measures taken during the 10and five-year plan (2001-2005), sulfur dioxide emissions continued to rise sharply, reaching a peak in 2005-2006.

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The main reason is that the implementation of environmental policies at the local level was biased in favor of economic development, on which was indexed the career of the civil servants in charge of the implementation of anti-pollution measures (Ming Qin, Lin-feng Fan, Jing Li and Yi-fei Li, “The Income Distribution Effects of Environmental Regulation in China. The Case of Binding SO2 Reduction Targets », Journal of Asian Economics notoh 73, April 2021).

Commitment contracts

This is why the government has introduced a new approach under the 11and plan (2006-2010), by setting binding reduction targets of 10% by 2010 for the total emission of the main pollutants. In this context, the local authorities had to sign commitment contracts and the central power could block new projects in the event of non-compliance with the objectives. This new policy has met with clear success in the case of sulfur dioxide, with a drop of more than 14% in emissions between 2005 and 2010.

Over this period, economic growth was not significantly affected, insofar as China then fully benefited from its membership of the World Trade Organization (WTO). But the same is not true of the social impact, as this study covering the period 2002-2007 shows.

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The four authors thus compare data from the periods before and after the implementation of pollution control policies, in order to analyze their impact on the evolution of wages for different types of workers. They thus confirm the heterogeneity of the effects of anti-pollution policies: stopping or reducing the most polluting activities leads to layoffs and has a negative impact on the wages of unskilled workers in the regions and towns of the center and east of China where they are concentrated, which mechanically contributes to increasing the inequalities between skilled and unskilled workers.

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