How Does Environmental Pollution Affect Employment in China? The Role of Investment in Environmental Pollution Management

The development of a green economy and the control of environmental pollution have been recognized as two vital issues that may influence sustainable development in the Chinese job market. However, the dynamic of such association is yet to be adequately explored in the past. This study examines the specific effect of environmental pollution on employment, with the investment in environmental pollution management served as the moderator and mediator. Based on the Chinese provincial panel data between 2003 and 2017, while air pollution is found to have reduced employment in urban areas, an investment in environmental preservation can mitigate such adverse impact. On the contrary, air pollution promotes rural employment but investment in environmental protection attenuates this favorable effect—probably due to increased operating costs. The mediation analysis shows that air pollution, and not water pollution, can boost employment via environmental-preserving investment in China, as a whole. Thus, investment in environmental pollution management can increase employment in China’s urban areas that are impacted by industrial pollution, justifying the Chinese government endeavor in boosting employment creation through the development of environmental protecting industries.