This paper studies the impact of Chinaʻs accelerated depreciation policy (ADP) that was enacted in 2014 on labor share. We explore a firm-level dataset from Chinaʻs industrial enterprise database and estimate the policy effects using a difference-in-differences framework. We find that the ADP apparently reduces the labor share of the treated firms compared to the control firms, which is a net effect jointly driven by the capital deepening and skill structure upgrading channels. Among these two channels, the former is dominant and has negative effects on labor share, while the latter is positively related to the labor share. We also demonstrate that the firms with less financial constraints experience a more profound capital deepening process and a larger decline in labor share after policy enactment. These results suggest that the widespread use of investment tax incentives may be one of the reasons for the decline in global labor share in recent years.

This paper exploits a quasi-natural experiment in China, the environmental protection tax reform, to examine the effect of environmental regulation on corporate green investment. Based on Chinese listed company data and the multi-period DID method, we find the enhancement of environmental regulation harms corporate green investment in a short time, and green investments in the treatment group were reduced by 19.57 million (RMB) on average. Further exploring and examining the potential mechanisms of the above effect, we find the above effect is caused by the suppression effect of financing constraints and the crowding-out effect of research and development (R&D) expenditures. We also analyze the heterogeneity of enterprise ownership, enterprise size, and enterprise location, and find that non-state-owned enterprises, small-sized enterprises, and enterprises in the eastern region will experience a greater reduction in green investment when environmental regulation is enhanced. Based on the above findings, we put forward corresponding policy recommendations.