Labor Costs, Market Environment and Green Technological Innovation: Evidence from High-Pollution Firms

Abstract

Emerging economies face the challenge of increasing labor costs but also provide an opportunity to promote environmental governance and green development. Based on the perspectives of impetus and capability, the effects of rising labor costs and market environment on green technological innovation are investigated in this study. The empirical studies used the data of high-pollution firms in China from 2009 to 2018. Results demonstrate that rising labor costs deteriorates high-pollution firm performance, while highly competitive industries are affected more than other industries. Meanwhile, the influence of rising labor costs on green technological innovation has a threshold effect which illustrates an “inversely U-shaped” variation trend with the increase of degree of market monopoly. The labor costs will make biggest impact on the green technological innovation in the moderately concentrated market environment. Basing from these results, this study provides the following suggestions for emerging economies’ green development: Take rising labor cost as an opportunity to advance technological progress to the green direction, establish a sound market competition environment, and develop green finance to reduce the financing constraints of green technological innovation.

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“…The results in all models suggest that enterprise innovation vitality can significantly promote green technology innovation, which is consistent with the results of Gong et al (2020), Peng and Li (2018). But after adding policy variables, the coefficients of enterprise innovation vitality decrease.…”

“…Based on previous research (Wang and Chu, 2019;Deng and Chen, 2020;Gong et al, 2020), this paper uses the number of green patent applications (gpa) to indicate green technology innovation. The main reason is that green patent application data can reflect green technology innovation more directly (Evenson and Griliches, 1990;Haščič and Migotto, 2015).…”

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