From Employer Responsibility to Environmental Irresponsibility: Unintended Effects of Social Insurance Law on Pollution Emissions

This study investigates the unintended effect of the introduction of the 2011 Social Insurance Law on corporate pollution emissions. Using a difference-in-differences framework, our analysis reveals that enhanced social insurance contributions lead to higher industrial pollution emissions, as measured by chemical oxygen demand and wastewater emissions. The mechanism analysis indicates that the enforcement of the law increases firms’ labor costs and financial distress, motivating them to reduce efforts on end-of-pipe treatment activities and measures taken during production process, which results in higher pollution emission intensity. Our study highlights the potential conflict between employee protection and corporate environmental goals. Further analysis suggests that stronger environmental monitoring and ESG disclosure requirements can partially mitigate this trade-off, providing valuable insights for policymakers.