The Mechanisms and Empirical Analysis of the Impact of Environmental Regulations on Employment Levels in Specific Industries in China

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The manuscript is well-structured and contributes to the literature on environmental regulation and labour economics. The use of industrial linkages to assess employment effects is a novel approach. However, there are areas requiring improvement, particularly in theoretical clarity, methodological justification, and policy implications to enhance the overall quality of the manuscript.

1. The introduction effectively frames the research problem but should better integrate global perspectives on environmental regulation.
2. The reference style employed in the manuscript is not according to the MDPI template. The authors should correct this.
3. Figures are so blurry and not in English (especially Figure 2). The authors should provide high-resolution, clear and well-constructed Figures in the manuscript.
4. The research gap is well-stated, yet further discussion on why China’s case is unique should be provided to strengthen the argument.
5. The literature review is comprehensive but overly focused on Chinese studies. The authors should incorporate more international comparisons to enhance the discussion.
6. The hypotheses are clearly and well formulated. However, the authors should provide a stronger theoretical underpinning (e.g., integrating institutional or labour market theories).
7. The choice of environmental regulation proxy (GDP/Energy) is reasonable but the authors should provide and discuss alternative measures (e.g., pollution control expenditures).
8. The study employs panel data regression and network transmission models, which are appropriate. However, the authors should provide additional justification for using the 2021 OECD Input-Output Tables.
9. The empirical findings are insightful, particularly the U-shaped relationship. However, robustness checks beyond removing two industries (e.g., alternative model specifications) would strengthen credibility if provided by the authors.
10. The authors should ensure that the discussion better connects with policy implications, such as how firms can mitigate job losses through adaptation strategies.
11. The authors should ensure that the conclusion better reflects the study’s broader implications, including labour reskilling policies.
12. Lastly, the policy recommendations are somewhat generic. The authors should provide concrete examples or case studies that would enhance their applicability.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

The analyzed topic is very important and current, both for the Chinese economy and the EU or the USA. Assessing the first effects of ESG regulation in the real economy is very important, with the legislative process, which can and should be adapted to the intended effects.

The study is substantively correct. The authors presented a proper review of theoretical and research literature. The adopted assumptions of the model, variables and the proper procedure for estimating the model. The analysis period and statistical data guarantee the possibility of conducting research. Important are the conclusions for business practice, concerning the assessment of changes taking place at the level of enterprise sectors, broken down into the level of technology and mutual interactions. The conclusions of the research on the concentration of improvements at the early level of the supply chain in the downstream sectors should be assessed positively, as well as the impact of regulation on the position of the industry in the chain.

I assess the substantive aspects, the layout of the content, research methods and interpretations of the applications positively. Ps. To monitor the impact of ESG regulations in the future, the authors could continue the presented study for the next years.

Author Response

Thank you for your review and valuable comments. We fully acknowledge the profound impact of ESG regulations on the economy and have emphasized their effects on different industries and supply chain segments in our study. Based on your suggestions, we have further discussed the long-term implications of ESG regulations in the conclusion and added considerations for potential policy adjustments. Additionally, we have clarified the scalability of our research methodology to support future monitoring. We sincerely appreciate your recognition of our study, and we believe these revisions will further enhance its contribution.

Reviewer 3 Report

Comments and Suggestions for Authors

1. Critical Review of the Study

This study offers an empirical examination of the relationship between environmental regulations and industry-specific employment, incorporating inter-industry linkages into its framework. This study holds substantial policy relevance as it addresses the complex interplay between environmental policies and labor market adjustments. However, certain methodological and analytical shortcomings limit its scholarly and practical contributions. The study does not sufficiently consider the spatial heterogeneity of environmental regulations, which is critical for deriving industry-specific policy implications. Without addressing how regulatory effects vary across airborne, land-based, maritime, and submarine industries, the findings remain generalized, reducing their applicability to real-world policymaking. Although this study takes an innovative approach by integrating inter-industry effects into its analysis, its methodological rigor and theoretical depth require further refinement. The lack of this study for a clear articulation of academic novelty weakens its position within the existing literature.

2. Evaluation of the Introduction

The introduction sets out to establish the distinctiveness of this study by positioning it as a novel contribution to the discourse on environmental regulation and employment. However, it falls short in clearly differentiating itself from existing research, particularly in its treatment of inter-industry linkages. While the study highlights the role of these linkages, it does not adequately explain how its approach advances beyond prior studies, leaving its theoretical contribution underdeveloped. Without a well-defined distinction from existing literature, the study risks being perceived as a replication of earlier works rather than a meaningful extension. Furthermore, the introduction for this study lacks an explicit discussion on the spatial heterogeneity of environmental regulations, which is crucial for understanding their industry-specific impacts. Environmental policies are not applied uniformly across all sectors, as their enforcement varies based on airborne, land-based, maritime, or submarine contexts. Each of these regulatory categories has distinct implications for employment structures, yet the study does not fully incorporate this dimension into its framework. The omission of this spatial perspective limits the depth of analysis, making the findings less applicable across different regulatory environments. In addition, the introduction does not sufficiently acknowledge the extensive body of literature that has already explored the relationship between environmental regulation and labor demand. Given the abundance of prior research in this field, it is essential to clarify the novel analytical contribution of this study.

3. Evaluation of the Mechanism Analysis

This study for the environmental regulation effects into direct mechanisms and network transmission effects provides a structured theoretical approach. However, the discussion does not fully explore the interaction between these mechanisms, leaving a critical gap in the analysis. For example, In Line 102–105, this study describes how pollution-intensive industries may be forced to scale down production due to the increased costs associated with stringent environmental regulations. While this explanation captures the cost effects of regulation, it does not sufficiently account for the innovation effects that may arise in response to regulatory constraints. Environmental policies have the potential to drive technological advancements that create new employment opportunities, but the study does not analyze how these competing forces interact. Without addressing the coexistence of cost and innovation effects, the discussion remains incomplete and risks oversimplifying the employment impact of environmental regulations. My critical review, adding to the missing interaction between cost and innovation effects, this study does not incorporate the spatial dimension of environmental regulation into its mechanistic analysis. The impact of regulations varies significantly across industries based on their geographic and operational context. For example, in the maritime industry, emission regulations may initially lead to job losses in conventional shipping operations but simultaneously generate new employment opportunities in green shipbuilding and alternative fuel sectors. In contrast, land-based industries subject to carbon taxation may experience labor demand contractions due to rising production costs. By failing to examine these sectoral differences, the study limits its ability to provide a nuanced assessment of how environmental regulations shape employment patterns across different industries. A more comprehensive framework that integrates these spatial variations would greatly enhance the depth and applicability of the study’s findings.

5. Evaluation of Variables and Data Sources

Critical pointout as below. The empirical section of the study relies on industry-level panel data from 2009 to 2018, sourced from reputable institutions. However, several aspects of variable construction require further justification to ensure methodological rigor. In Line 207–210, the study explains its choice of data sources, noting the limitations of alternative databases. While the decision to use the 2021 OECD inter-country input-output tables is reasonable, the variable used to measure environmental regulation intensity raises concerns. The study relies on GDP-to-energy consumption ratio (GDP/Energy) as a proxy for regulatory stringency, which is an indirect measure that does not fully capture the enforcement or economic burden of environmental policies. More direct indicators, such as environmental taxation, pollution control investments, or legal enforcement measures, would provide a more accurate representation of regulatory intensity. Without incorporating such direct measures, the empirical findings remain susceptible to misinterpretation and may not fully reflect the true impact of environmental regulations on employment.

Beyond the choice of regulatory intensity variables, the sample size distribution across industries raises concerns about potential statistical biases. The appendix reveals significant variation in the number of observations across different industry groups. If the study did not employ random sampling, adjustments must be made to correct for sample imbalances.

7. Evaluation of Empirical Analysis

The empirical analysis builds on a structured econometric framework, but several refinements are necessary to strengthen its validity. In Line 312–315, the study introduces a virtual variable to capture network transmission effects, demonstrating that environmental regulation indirectly influences employment levels through inter-industry networks. While this approach is conceptually sound, several methodological concerns require attention. One key issue is the study’s claim that environmental regulations exhibit nonlinear employment effects. Although this assertion is theoretically plausible, the study does not provide sufficient robustness checks to validate it. Additional tests, such as curve-fitting models or nonlinearity diagnostics, would help confirm the existence of nonlinear patterns in the data. Furthermore, given the heterogeneous nature of regulatory impacts across industries, a subgroup analysis differentiating pollution-intensive and low-emission sectors would provide a clearer picture of how employment effects vary across different industry types. Without these refinements, the empirical findings remain suggestive but not fully substantiated.

8. Evaluation of Conclusion and Policy Implications

The conclusion effectively summarizes the study’s findings but does not provide sufficiently detailed policy recommendations. Although it acknowledges that environmental regulations have heterogeneous effects across industries, the proposed policy implications remain too broad to be actionable. A more refined policy framework should differentiate regulatory impacts based on spatial dimensions and sectoral needs. For instance, maritime industries may require government incentives for green fuel adoption and investment in eco-friendly shipbuilding, while land-based manufacturing may benefit from tax incentives for adopting low-emission technologies. Without industry-specific recommendations, the policy section lacks the precision necessary for meaningful application.

Comments on the Quality of English Language

1. Critical Review of the Study

This study offers an empirical examination of the relationship between environmental regulations and industry-specific employment, incorporating inter-industry linkages into its framework. This study holds substantial policy relevance as it addresses the complex interplay between environmental policies and labor market adjustments. However, certain methodological and analytical shortcomings limit its scholarly and practical contributions. The study does not sufficiently consider the spatial heterogeneity of environmental regulations, which is critical for deriving industry-specific policy implications. Without addressing how regulatory effects vary across airborne, land-based, maritime, and submarine industries, the findings remain generalized, reducing their applicability to real-world policymaking. Although this study takes an innovative approach by integrating inter-industry effects into its analysis, its methodological rigor and theoretical depth require further refinement. The lack of this study for a clear articulation of academic novelty weakens its position within the existing literature.

2. Evaluation of the Introduction

The introduction sets out to establish the distinctiveness of this study by positioning it as a novel contribution to the discourse on environmental regulation and employment. However, it falls short in clearly differentiating itself from existing research, particularly in its treatment of inter-industry linkages. While the study highlights the role of these linkages, it does not adequately explain how its approach advances beyond prior studies, leaving its theoretical contribution underdeveloped. Without a well-defined distinction from existing literature, the study risks being perceived as a replication of earlier works rather than a meaningful extension. Furthermore, the introduction for this study lacks an explicit discussion on the spatial heterogeneity of environmental regulations, which is crucial for understanding their industry-specific impacts. Environmental policies are not applied uniformly across all sectors, as their enforcement varies based on airborne, land-based, maritime, or submarine contexts. Each of these regulatory categories has distinct implications for employment structures, yet the study does not fully incorporate this dimension into its framework. The omission of this spatial perspective limits the depth of analysis, making the findings less applicable across different regulatory environments. In addition, the introduction does not sufficiently acknowledge the extensive body of literature that has already explored the relationship between environmental regulation and labor demand. Given the abundance of prior research in this field, it is essential to clarify the novel analytical contribution of this study.

3. Evaluation of the Mechanism Analysis

This study for the environmental regulation effects into direct mechanisms and network transmission effects provides a structured theoretical approach. However, the discussion does not fully explore the interaction between these mechanisms, leaving a critical gap in the analysis. For example, In Line 102–105, this study describes how pollution-intensive industries may be forced to scale down production due to the increased costs associated with stringent environmental regulations. While this explanation captures the cost effects of regulation, it does not sufficiently account for the innovation effects that may arise in response to regulatory constraints. Environmental policies have the potential to drive technological advancements that create new employment opportunities, but the study does not analyze how these competing forces interact. Without addressing the coexistence of cost and innovation effects, the discussion remains incomplete and risks oversimplifying the employment impact of environmental regulations. My critical review, adding to the missing interaction between cost and innovation effects, this study does not incorporate the spatial dimension of environmental regulation into its mechanistic analysis. The impact of regulations varies significantly across industries based on their geographic and operational context. For example, in the maritime industry, emission regulations may initially lead to job losses in conventional shipping operations but simultaneously generate new employment opportunities in green shipbuilding and alternative fuel sectors. In contrast, land-based industries subject to carbon taxation may experience labor demand contractions due to rising production costs. By failing to examine these sectoral differences, the study limits its ability to provide a nuanced assessment of how environmental regulations shape employment patterns across different industries. A more comprehensive framework that integrates these spatial variations would greatly enhance the depth and applicability of the study’s findings.

5. Evaluation of Variables and Data Sources

Critical pointout as below. The empirical section of the study relies on industry-level panel data from 2009 to 2018, sourced from reputable institutions. However, several aspects of variable construction require further justification to ensure methodological rigor. In Line 207–210, the study explains its choice of data sources, noting the limitations of alternative databases. While the decision to use the 2021 OECD inter-country input-output tables is reasonable, the variable used to measure environmental regulation intensity raises concerns. The study relies on GDP-to-energy consumption ratio (GDP/Energy) as a proxy for regulatory stringency, which is an indirect measure that does not fully capture the enforcement or economic burden of environmental policies. More direct indicators, such as environmental taxation, pollution control investments, or legal enforcement measures, would provide a more accurate representation of regulatory intensity. Without incorporating such direct measures, the empirical findings remain susceptible to misinterpretation and may not fully reflect the true impact of environmental regulations on employment.

Beyond the choice of regulatory intensity variables, the sample size distribution across industries raises concerns about potential statistical biases. The appendix reveals significant variation in the number of observations across different industry groups. If the study did not employ random sampling, adjustments must be made to correct for sample imbalances.

7. Evaluation of Empirical Analysis

The empirical analysis builds on a structured econometric framework, but several refinements are necessary to strengthen its validity. In Line 312–315, the study introduces a virtual variable to capture network transmission effects, demonstrating that environmental regulation indirectly influences employment levels through inter-industry networks. While this approach is conceptually sound, several methodological concerns require attention. One key issue is the study’s claim that environmental regulations exhibit nonlinear employment effects. Although this assertion is theoretically plausible, the study does not provide sufficient robustness checks to validate it. Additional tests, such as curve-fitting models or nonlinearity diagnostics, would help confirm the existence of nonlinear patterns in the data. Furthermore, given the heterogeneous nature of regulatory impacts across industries, a subgroup analysis differentiating pollution-intensive and low-emission sectors would provide a clearer picture of how employment effects vary across different industry types. Without these refinements, the empirical findings remain suggestive but not fully substantiated.

8. Evaluation of Conclusion and Policy Implications

The conclusion effectively summarizes the study’s findings but does not provide sufficiently detailed policy recommendations. Although it acknowledges that environmental regulations have heterogeneous effects across industries, the proposed policy implications remain too broad to be actionable. A more refined policy framework should differentiate regulatory impacts based on spatial dimensions and sectoral needs. For instance, maritime industries may require government incentives for green fuel adoption and investment in eco-friendly shipbuilding, while land-based manufacturing may benefit from tax incentives for adopting low-emission technologies. Without industry-specific recommendations, the policy section lacks the precision necessary for meaningful application.

Author Response

Please see the attachment

Author Response File: Author Response.pdf