Green finance policy and labor demand: Evidence from China

Using the implementation of "Green Finance Reform and Innovation Pilot Zone" (GFPZ) policy as a quasi-natural experiment, we investigates the impact of the GFPZ on enterprises' labor demand by considering 2009-2021 data for a sample of listed firms. The results show that the implementation of this policy has increased labor demand in pilot zones. After controlling for endogeneity and testing robustness, we find that the results remain valid. Furthermore, the mechanism test results show that the implementation of GFPZ policy has a positive impact on the labor demand of enterprises by improving operational capability, enhancing development prospects, and optimizing social evaluation. However, it reduces labor demand by exacerbating the financing pressure on enterprises. Additionally, further analysis reveals that the GFPZ policy contribute to the improvement of labor quality. The impact of policy was more significant for manufacturing enterprises and enterprises located in cities with high environmental pressure.