ABSTRACT: This paper uses DID model to analyze the effect of carbon emission trading mechanism on employment in industrial sectors in pilot regions, including Beijing, Shanghai, Tianjin, Chongqing, Hubei, Guangdong and Shenzhen . Then, this paper applies SYS-GMM model to analyze the nexus of carbon price and employment, and contributes to the literature by decomposing the mechanism effect into complementarity effect and scale effect. This is done by means of China Statistical Yearbook and statistical yearbooks of pilot regions. The results show that carbon emission trading mechanism has a significantly positive effect on employment in pilot regions’ industrial sectors. Carbon price has a larger positive scale effect, which is enough to offset the negative complementarity effect on employment. Moreover, carbon price has a larger scale effect in industrial sectors with high market concentration ratio than low market concentration ratio, while a larger complementarity effect in industrial sectors with high energy intensity than low energy intensity. The results indicate that manufacturers with market power will increase factor input and use their market power to reduce abatement cost, so that the labor demand will be increased. Manufacturers where labor and carbon emission are complementary will also increase labor demand as carbon price rises.

Carbon emission trading mechanism,Carbon price,DID,SYS-GMM,Complementarity effect,Scale effect