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A futile help: do vertical transfer payments promote haze control?

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Abstract

Most existing studies believe that vertical transfer payments (VTPs) can enhance the fiscal capacity of local governments, thus improving the environment. Taking China's VTPs to resource-exhausted cities as an example, we analysed the impact of the VTP on city haze pollution (CHP) by using a progressive difference-in-difference (DID) model. Instead of improving city haze control in other studies, our results show that VTPs given by the central government to resource-exhausted cities aggravate CHP. Robustness tests based on several methods still confirm the above findings. Dynamic feature analysis shows that the aggravating effect of VTPs on CHP in resource-exhausted cities may continue for years. The mediating effect results show that VTPs aggravate CHP by inhibiting technological innovation and high-tech industrial agglomeration, which partly confirm the path-dependence theory. In addition, environmental regulation reduces the aggravating effect of VTPs on the CHP. Our conclusion supplements the ecological effect research of the VTP and has important reference significance for developing countries to improve the ecological governance of resource-exhausted cities by building and improving fiscal transfer systems and ecological compensation institutions.

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Acknowledgements

The authors gratefully acknowledge the financial support provided by the National Social Science Foundation of China (Grant No. 22CJL033), Annual Project of Philosophy and Social Science Research Planning of Heilongjiang Province (Grant No. 22JYC328), the Fundamental Research Funds for the Central Universities (Grant No. HIT.HSS.202219) and Special Research Project on the Theory of the People's Political Consultative Conference of Jilin University (Grant No. 2021zx03019).

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  1. Centre for China Public Sector Economy Research and School of Economics, Jilin University, Changchun, 130012, China

    Siying Yang

  2. School of Economics, Jilin University, Changchun, 130012, China

    Hua Bai

  3. School of Humanities, Social Sciences and Law, Harbin Institute of Technology, Harbin, 150001, China

    An Li

  4. School of Management, Harbin Institute of Technology, Harbin, 150001, China

    An Li

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Yang, S., Bai, H. & Li, A. A futile help: do vertical transfer payments promote haze control?. Econ Change Restruct 56, 3411–3436 (2023). https://doi.org/10.1007/s10644-023-09537-1

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