تطابق محیط زیست و سرمایه انسانی: شواهدی از شرکت های صنعتی چینی

By using a unique cross-sectional dataset of Chinese industrial firms, this paper investigates the external and internal effects of human capital on firms’ environmental performance. The result shows that firms have better environmental compliance because they are ‘pushed’ into compliance by the internal driver of human capital and ‘pulled’ to be environmental friendly by the external force of social human capital stock. This finding is robust when we take into account the possible endogeneity of human capital. In addition, evidence from this study suggests that the current situation of weak implementation of environmental supervision and evasion of environmental monitoring could be improved by promotion of internal and external human capital.

The increasingly serious level of industrial pollution poses a challenge to China's fast economic growth. Despite well-conceived laws, enforcement varies tremendously on the ground (Wang et al., 2003 and Wang and Wheeler, 2005). Local governments’ focus on economic growth and firms’ resistance toward additional compliance have both brought about weak implementation (SEPA, 2006). Given this situation, it is important to understand the drivers behind compliance with environmental regulations and so, in this paper, analyze the factors behind compliance by using a unique environmental performance data of 2544 industrial Chinese firms. Now, there is already a large literature on regulatory compliance. Our particular focus is on the relationship between human capital and compliance which we consider a neglected aspect of the existing research. Conceptually, the relationship between human capital and industrial pollution can be through either an internal or an external route. Within the firm, the implementation of abatement technology is determined by the absorptive capacity of internal human capital endowment: the higher the level of human capital, the better the application within the firm. Outside the firm, higher educated people are more likely to tighten the stringency of environmental regulations by imposing pressure on environmental regulators. Based on the above descriptions, we hypothesize that (i) the internal effect of human capital pushes firms to voluntarily comply with environmental regulations and (ii) by enhancing regulatory pressure, the external effect of human capital also pulls firms to have better environmental performance. We make three contributions to the existing literature. First, the paper sheds light on the internal and external effects of human capital on firms’ environmental performance. Our results show that firms have better environmental performance because they are ‘pushed’ into making compliance decision by internal endowment of human capital, and ‘pulled’ by external forces of social human capital stock. Accordingly, better environmental performances are achieved based on the internal and external drivers of human capital. Second, we take into account the possible endogeneity of both external and internal human capital. From the internal side, as shown by Grolleaua et al. (2012), environmental-related standard (i.e. ISO 14001 standard) tend to improve the recruitment of professional employees. Such enhancement implies that better environmental performance can deliver more than environmental benefits and firms can strategically use environmental quality standards to attract high educated or high skilled employees who are more sensitive to environmental protection. From the external side, higher educated people may move to cleaner cities since they are more sensitive to environmental quality (in the sense of having higher willingness to pay for quality improvements). In short there is a potential for two-way causality between human capital and environmental performance. Most studies reviewed in Section 2 do not concern themselves with the endogeneity of human capital; our study on the other hand, better identifies the causal relationship between environmental performance and human capital. Our third contribution is that we build a new database of firm-level data on environmental performance for China. Blackman and Kildegaard (2010) argue that most studies in developing countries rely on self-reported firm-level environmental data, which can be unreliable. However, instead of self-reported information, the environmental performance data we use is evaluated and compiled by a government environmental administration. Thus, our study may fill gap in the literature by providing evidence from the regulator-reported environmental data of Chinese industrial polluters. The remainder of the paper is organized as follows. In Section 2, we give a brief review of the related literature on environmental performance and human capital, highlighting their connection though internal and external paths. Section 3 presents the data and explains the empirical methodology. Section 4 estimates the econometric models and discusses the results obtained. The final section concludes and derives policy implications.

In this paper, we have empirically examined the internal and external effects of human capital on environmental compliance by using the real environmental performance data of Chinese industrial firms. Our estimation shows that firms’ compliance decisions are not only affected by their internal endowment of human capital, but also impacted by the external stock of social human capital. Firms with high human capital are more likely to have better environmental compliance. The study also finds that a highly educated local population (CCOLLEGE) contributes to firms’ environmental performance. In contrast, a low level of education in the local population (CPRIMARY) is associated with poorer compliance. The results are still significant after we give thought to the possible endogeneity of both internal and external human capital. However, for clean industries, our results demonstrate that the variation in external human capital is a better determinant of the firms’ environmental performances than the variation in internal human capital. We do not find supporting evidence for the internal effect of human capital in SO2-related and soot-related clean industries when we decompose our data into dirty and clean sectors by pollution intensity of industries in the terms of industrial polluted water emission, industrial SO2 emission and industrial soot emission. The findings in this study have important policy implications. The role of city-wide human capital levels in compliance suggests that there is a positive externality from education. More generally, evidence from this study suggests that the situation of weak implementation of environmental supervision and evasion of environmental monitoring could be improved by means of internal and external human capital. On the regulator side, a strategy of boosting the educational attainment of the population may be recommended to pull firms into better environmental compliance. On the firm side, raising human capital may induce improved environmental performance. Although we have established the importance for compliance of external human capital, we do not know the exact route by which higher education levels influence firm behavior. It could be that human capital levels in the regulatory agency track general education level and so city-level human capital is a proxy for the human capital of the environmental agency. Alternatively, it could be that individuals with higher education levels are more sensitive to compliance and/or more efficient in making complaints, lobbying for controls and prompting investigations into compliance. This is an issue that requires further research.