Green Finance, Fiscal Expenditure Efficiency, and Employment Quality

This study investigates whether green finance improves labor employment quality and whether fiscal expenditure efficiency serves as a key transmission channel. Using a panel of Chinese prefecture-level cities from 2003–2022, we measure employment quality with an entropy-weighted composite index capturing wage conditions, employment availability, employment structure upgrading, and employment formalization. Baseline fixed-effects estimates show that green finance is positively and robustly associated with employment quality. Mechanism tests indicate partial mediation through both overall fiscal expenditure efficiency and structural fiscal expenditure efficiency, with the latter playing a more pronounced role. Heterogeneity analyses suggest that the positive effect is concentrated in non-eastern regions, non-sub-provincial cities, smaller cities, and low-green-finance cities. The findings highlight fiscal governance efficiency as an important link between green financial development and inclusive labor-market outcomes.