Measure is treasure: Revisiting the role of environmental regulation in Chinese industrial green productivity

Green productivity plays an important role in China's industrial economy. By adopting the technique of Malmquist Luenberger index based on the non-radial directional distance function (NDDF), this paper evaluates the green total factor productivity (GTFP) of the 36 sub-industries in China's industrial field from 2005 to 2015. On this basis, this article further investigates the effects as well as impact mechanisms of environmental regulation (ER) on the industrial GTFP. The empirical analysis reveals that there is a significant positive correlation between ER and industrial green growth, with a one-standard-deviation rise in ER leading to an average 0.0683% GTFP increase. Through the decomposition procedure of Chinese industrial GTFP, we further prove that technological progress, compared to technical efficiency improvement, plays a more essential role in driving industrial green growth. Results of the intermediate effects model indicate that ER can promote the industrial GTFP through industrial structure upgrading. We also find that the effect of ER varies with the levels of per capita output, energy efficiency, and technology intensity. This study sheds new light on the effects of ER on industrial GTFP from perspectives of heterogeneous effects and impact mechanisms analysis.