Keywords
Capital-labor ratio
Total factor productivity
Double-difference method
Firm heterogeneity
Submitted : 2024-11-24
Accepted : 2024-12-09
Published : 2024-12-24
Abstract
Using a double-difference model, this paper examines the impact of the 2018 Environmental Protection Tax Law of the People’s Republic of China on the capital-labor ratio of A-share listed enterprises in China. The results indicate that the implementation of the environmental protection tax significantly increases the capital-labor ratio of firms, leading to a preference for capital-intensive production. The mediating role of total factor productivity (TFP) in this process suggests that the environmental protection tax enhances the capital-labor ratio by fostering TFP growth. Heterogeneity analysis reveals that the effect of the environmental protection tax on the capital-labor ratio is more pronounced in economically developed regions, state-owned enterprises, and enterprises with a longer operational history.
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