A neglected climate risk: The price effect of urban waterlogging.

With global warming, cities are vulnerable to extreme weather, increasing the climate risk to cities worldwide. Although existing literature has examined the ex-post impacts of extreme weather, it is less clear how climate risk affects cites before extreme weather occur. To lower the risk of urban waterlogging, which is caused by extreme weather, and improve the ability of cities to adapt to extreme weather, China launched the Sponge City Project (SCP) in 2013 to manage the urban stormwater and waterlogging. Adopting the SCP pilot in China as a quasi-natural experiment, we examine the impact of the climate risk caused by urban stormwater and waterlogging on the house price with the difference-in-differences (DID) method. We find that after implementing the SCP pilot program, the house price in pilot cities increased significantly because of the improvement in cities' resilience to climate risk. Additionally, this effect was only demonstrated in cities with a high waterlogging risk. For SCP pilot cities with lower waterlogging risk, the house price is not significantly affected by SCP implementation. This indicates that the house price in China is sensitive to the climate risk caused by the urban stormwater and waterlogging. Our findings also contribute to the understanding of the significance of the climate risk management, and provided theoretical evidence for urban governance.

To green or to work: the labor demand reduction effect of green finance.

China's economic growth miracle of the past decades has been accompanied by a massive increase in fossil fuel consumption and severe environmental pollution. To control air pollution, China is implementing some green finance policies. Although they have improved the air quality, it is little known whether and how green finance affects the firm labor demand. Taking the 2012 Chinese green credit policy (GCP) as an exogenous setting, this paper adopts the difference-in-difference (DID) method to investigate the effect of green finance on firm labor demand based on A-share listed firms covering 2007-2017. We find that green finance had a significant negative impact on firm labor demand. Specifically, the high-polluting firms with stricter green finance constraints would reduce firm employment by 4.8%. This effect is especially prominent when firms are state-owned enterprises (SOEs) or workers are low-skilled employees. Further evidence indicates that there are the Compliance Cost Hypothesis and Porter Hypothesis in China. In these two effects, the effect of CCH dominates, so the overall effect of green finance is detrimental to corporate performance, which in turn leads to lower corporate employment. Our paper provides the real effect of green finance from the firm labor market. And this paper has strong policy recommendations that the government should reconcile the relationship between air pollution control and employment.

Does government institutional reform deter corporate tax evasion? Evidence from China.

Exploiting the quasi-natural experiment of the social insurance collection system reform implemented in China in 2000, based on data from China's industrial enterprise database from 1998 to 2006, we use the difference-in-differences method to test the impact of changing the social insurance collection institution on corporate tax evasion. We find that changing the social insurance collection institution from the social security department to the local tax department significantly deters corporate tax evasion. A series of robustness tests also support this conclusion. The reason is changing the social insurance collection institution to the local tax department increases its' social insurance information of the enterprise, and reduces the information asymmetry between the enterprise and the collection institution. Furthermore, we find that the impact of changing the social insurance collection institution on corporate tax evasion is more evident in the samples of labor-intensive enterprises, low labor cost enterprises, and enterprises under the jurisdiction of the local tax department. These results indicate that government institutional reform is a valid way to reduce the information asymmetry between the government and enterprises, which will finally deter corporate tax evasion.

Export Expansion May Increase Adult Illness and Injury: A Quasi-Natural Experiment on China's Accession to the World Trade Organization.

Purpose: Exports can boost the economy, but may also cause harm to health through, for example, increased pollution and working hours. Although academic research extensively covers the impact of trade on health, few studies examine the mechanisms through which export expansion affects adult illness or injury within the past 4 weeks (illness/injury). Method: We utilized China's entry into the World Trade Organization (WTO) as a quasi-natural experiment to investigate the relationship between export expansion and adult illness/injury. We explored the possible mechanisms and the heterogeneity of these associations. Our methodology was based on the analysis of China's Health and Nutrition Survey data, Chinese Customs databases, and China's Statistical Yearbook. Results: Export expansion, induced by China's accession to the WTO, has a significantly positive effect on adult illness/injury [average effect (AE): 1.83%; 95% CI: 0.38-3.28%]. Our results remain robust following a series of robustness tests. Moreover, the effects of export expansion on adult illness/injury are more pronounced among urban residents (AE: 5.32%; 95% CI: 2.46-8.18%), women (AE: 2.68%; 95% CI: 0.57-4.80%), and higher-income groups (AE: 5.90%; 95% CI: 2.53-9.27%). Conclusions: We find a statistically significant and positive effect of export expansion on adult illness/injury.

Air pollution control and enterprise competitiveness - A re-examination based on China's Clean Air Action.

The "Air Pollution Prevention and Control Action Plan" is regarded as China's war against air pollution, which is also noted as China's Clean Air Action (CAA policy). Although abundant studies have focused on the impact of CAA policy on social activities, such as air quality, pollutants emission, and economic output, limited studies explore its impact on enterprise competitiveness from a more micro perspective. Improving total factor productivity (TFP) is essential to achieve economic efficiency and sustainable development. Identifying the impact and influence mechanism of the CAA policy on TFP is important for China to realize the coordinated development of environment and economy and promote high-quality economic development. Based on the difference-in-differences model, this paper evaluates the impact of the CAA policy on enterprise productivity. The empirical analysis shows that there is a significantly negative effect from the CAA policy to the TFP of polluting enterprises, indicating that the CAA policy has decreased enterprise productivity. Our finding is robust, after conducting several robustness tests, such as replacing different dependent indicators, adopting different policy measurement variables, considering other policy interventions and using propensity score matching. Besides, this paper also discusses the possible heterogeneities. This paper adds additional empirical evidence to understand the relationship between air pollution control and enterprise competitiveness. The conclusions of this paper have important practical significance for China to further promote air pollution control and perfect the environmental control system.

Environmental regulation and corporate tax avoidance-Evidence from China.

In this study, we used a difference-in-difference (DID) approach to analyze the effect of environmental regulation on corporate tax avoidance behavior based on China's carbon emissions trading pilot policy of 2013. Our findings were as follows: (1) Environmental regulation has led companies to adopt further tax evasion behaviors. Furthermore, the core conclusion was confirmed after a series of robust and endogenous tests, such as parallel trends and PSM-DID (propensity score matching-difference-in-difference). (2) Environmental regulations increase tax avoidance activities by reducing corporate cash flows. (3) The influence of environmental regulation on firm tax evasion is highly pronounced among non-state-owned enterprises, big-scale enterprises, and enterprises with a high degree of industry competition.

Crowding in or crowding out? How local government debt influences corporate innovation for China.

The pressure upon local governments to redeem their debt could affect government fiscal ability. It could consequently affect their fiscal policies on corporations, which might distort corporate innovation. Based on the data of Chinese Shanghai and Shenzhen A-share listed companies and the local government implicit short-term debt financed by local government financing vehicles (LGFVs) in 31 provinces, this paper shows that local government debt (LGD) negatively affects corporate R&D investment in China, thereby suggesting a strong crowding-out effect. The crowding-out effect is more pronounced when the firm is a non-state-owned enterprise (NSOE), the firm's size is small, the firm's age is young, or the firm is in the lower market competition. This paper provide evidence by interacting the terms that local government actions, such as consumption of fiscal resources, strengthening tax collection efforts, or consumption of credit resources, might partially account for the crowding-out effect. This study illustrates the innovation costs of local government debt.