Minimum Wages, State Ownership, and Corporate Environmental Policies

Prof. Tao CHEN, Associate Professor in Finance, Nanyang Business School

Date: 21 April 2023 (Friday)
Time: 10:30 am – 12:00 pm
Venue: E22-G015
Host: Prof. Endong YANG, Assistant Professor in Finance
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This study examines how minimum wage hikes affect firms’ industrial pollution. Using the establishment-level pollutant emission data on Chinese industrial firms and exploring the minimum wage policy discontinuities at county borders, we find that minimum wage hikes induce firms to pollute more and reduce their abatement efforts. In particular, a 10% increase in minimum wage corresponds to a 4.63% increase in COD emissions. State ownership mitigates the negative impact of minimum wages on pollutant emissions, suggesting its role in addressing externality. The effects of minimum wages on pollutant emissions are stronger for financially constrained firms and firms with lower product market power, and higher labor intensity. These effects are attenuated with the staggered increase of pollution fee charges across provinces. Overall, our findings highlight the unintended environmental consequences of labor market policies.


Prof. CHEN is the Associate Professor in Finance in the Division of Banking and Finance at Nanyang Business School (NBS), Nanyang Technological University. His research interest focuses on how financial market participants influence corporate policies, particularly issues related to environmental, social and governance (ESG), and how FinTech and financial innovation affect financial inclusion and risk. His research has been published in many top journals like Journal of Financial Economics, Management Science, Journal of Financial and Quantitative Analysis, Review of Finance, Strategic Management Journal. He is currently an Associate Editor of Financial Management, and has been elected to join the board of directors of Asian Finance Association, and invited to serve as an HKIMR Visiting Research Fellow by Hong Kong Monetary Authority (HKMA) and a Societal Impact Fellow by NTU Institute of Science and Technology for Humanity (NISTH). He has also won numerous awards in research and teaching such as the CUHK Young Scholars Award, NBS Research Excellence Award, and Nanyang Education Award.

All are welcome!