Has Green Fiscal Policy Promoted or Suppressed Employment: Evidence from “Comprehensive Demonstration Cities of Fiscal Policies for Energy Conservation and Emission Reduction”

Implementing effective green fiscal policies is a crucial means to promote urban energy conservation and emission reduction, facilitating a green and low-carbon transition. However, such transitions can also impact various sectors of the economic system. This paper takes the “Comprehensive Demonstration Cities of Fiscal Policies for Energy Conservation and Emission Reduction” pilot program as a case study and employs a difference-in-differences (DID) approach to explore the effects and mechanisms of green fiscal policies on employment. The main findings are as follows: (1) While reducing urban carbon emissions, the demonstration city pilot program has significantly boosted urban employment; (2) The policy primarily increases enterprise labor hiring through two mechanisms: the “output effect” and the “factor complementarity effect.” (3) The employment effects of the pilot program vary significantly across industries, sectors, and ownership types of enterprises. This study provides important empirical evidence and policy insights for designing more effective green fiscal policies in China, ensuring stable employment during the low-carbon transition, and achieving high-quality economic development.