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Minimum Wages, State Ownership, and Corporate Environmental Policies
Published online by Cambridge University Press: 01 July 2025
Abstract
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Exploring the minimum wage policy discontinuities at county borders, we find that minimum wage hikes induce industrial firms to pollute more and reduce their abatement efforts. State ownership mitigates these negative effects, suggesting its role in addressing externality. The adverse environmental impacts are attenuated by the staggered increase in pollution discharge fees across provinces. These effects are stronger for firms with higher minimum wage sensitivity, lower market power, and greater financial constraints, and for firms that are the subsidiaries of nonlisted companies. Overall, our findings highlight the unintended environmental consequences of labor market policies.
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- Type
- Research Article
- Information
- Journal of Financial and Quantitative Analysis , Volume 60 , Issue 6 , September 2025 , pp. 2921 - 2951
- Creative Commons
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.- Copyright
- © The Author(s), 2025. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington
Footnotes
We appreciate thoughtful comments and suggestions from Mara Faccio (the editor) and an anonymous reviewer. We are grateful for the comments from Darwin Choi, Oleg Gredil, Yi Huang, Yu-Fan Huang, Yuting Huang, Stuart Hyde, Wenjin Kang, Bo Li, Dan Li, Laura Xiaolei Liu, Pradeep Muthukrishnan, Yiming Qian, Aristotelis Stouraitis, Lewis Tam, Kelvin Tan, Radu Tunaru, Qiguang Wang, Yiyao Wang, Zigan Wang, Xintong Zhan, Hong Zhang, Haikun Zhu, and participants at the 2021 Five-Star Workshop in Finance, the 2022 AsianFA annual conference, the 2022 China International Conference in Finance, the 2023 FMA European, Capital University of Economics and Business, Hong Kong Baptist University, Jinan University, Renmin University, Tianjin University, Tulane University, University of Macau, University of Manchester, University of Manitoba, University of Science and Technology of China, University of Sussex, Wuhan University, and Zhejiang University. The views are our own, and we are solely responsible for any errors.
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