From Employer Responsibility to Environmental Irresponsibility: Unintended Effects of Social Insurance Law on Pollution Emissions
Published:
This study examines the unintended impact of the introduction of the 2011 Social Insurance Law on firms’ pollution emissions. Using a difference-in-differences research design, we find that enhanced social insurance contributions provoke higher industrial pollution emissions. The effect is more pronounced in non-SOE firms, firms in heavy-polluting industries, and those subject to lax environmental regulations. The mechanism analysis reveals that the implementation of the Social Insurance Law increases firms’ labor cost and financial distress, and motivates them to reduce efforts on end-of-pipe treatment activities and measures taken during production process, thus leading to higher pollution emission intensity. Overall, our study highlights the potential conflict between employee protection and corporate environmental goals, providing important implications for policy making.