How Economic Transition Influence the Labor Demand in Resource-Based Cities : Evidence from Shanxi Province, China

Shanxi Province is one of the regions with the highest concentration of resource-based cities in China. For a long time, its economic development had relied on coal mining. To implement the low-carbon development strategy, the National Development and Reform Commission (NDRC) established Shanxi Province as a Comprehensive Supporting Reform Pilot Zone for Resource-based Economy (CSRPZRE). We collected a data set of 284 Chinese cities from 2003 to 2017. The treatment effects of the CSRPZRE policy on carbon emissions and employment were examined by PSM-DID estimators. We further investigated mechanisms of the CSRPZRE policy's impact on firms' labor demand. The mediating effect models and moderating effect models were utilized. The study found that: (1) Due to the policy shock, both carbon emissions and employment in Shanxi Province decreased by about 10%. (2) Industrial structure adjustment, financial development and foreign direct investment (FDI) partially transmitted impacts of the CSRPZRE policy on labor demand. (3) The fiscal independence of local governments could moderate the treatment effects of the CSRPZRE policy on employment. Finally, this paper summarized 3 experiences and lessons learned from the economic transformation of resource-based cities in Shanxi Province. This could be a reference for other resource-based regions that are eager to transform their economic development