Does Low-Carbon Development Affect Employment in Manufacturing? Evidence from Chinas Low-Carbon City Pilots

To fulfill the carbon peak and carbon neutrality targets pledged in the 2016 Paris Agreement, China implemented the Low-Carbon City Pilot Policy (LCCP) in 2010, expanding its scope in 2012 and 2017. However, its effect on employment in manufacturing remains unexplored. This paper employs a difference-in-differences (DID) model and a micro-panel dataset of Chinese listed manufacturing firms from 2007 to 2021 to identify the casual effect of the LCCP on manufacturing employment. The findings reveal that (1) the LCCP leads to an average 3.9% increase in manufacturing employment; (2) this impact operates through output and factor substitution effects. These conclusions are validated through a series of endogeneity and robustness tests. The study provides new evidence supporting a win-win outcome between environmental protection and employment growth under low-carbon development initiatives.