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Introduction
Political decentralization is typically regarded as an effective means to improve the provision of public goods based on local needs and conditions (Tiebout 1956). In the realm of environmental governance, decentralized administrative frameworks often exhibit reduced operational effectiveness (Zhang et al. 2018). Local governments, in pursuit of economic benefits, have an incentive to selectively enforce central policies and potentially tolerate or conceal environmental violations, significantly undermining the effectiveness of environmental governance (McAusland 2003; Liu and Diamond 2005; Kunce and Shogren 2005). The central government’s vertical supervision plays a crucial role in tackling these issues (Zhang et al. 2018), as it guarantees the uniform enforcement of environmental regulations via administrative authority and alleviates the negative impacts of local protectionism on environmental governance.
The central environmental protection inspection (CEPI) exemplifies a vertical supervision policy in China (Zeng et al. 2023), transitioning the emphasis from “supervising firms” to “supervising the government” (Li et al. 2023). Unlike other environmental policies, CEPI is characterized by stringent supervisory measures and a top-down enforcement mechanism (Kopyrina et al. 2023). Its core objective is to address the principal-agent issue in local government environmental governance by enhancing direct central supervision, thereby ensuring the thorough and efficient execution of environmental policies (Wang et al. 2021). Based on this, existing research has extensively examined the role of CEPI in enhancing environmental quality (Jia and Chen 2019; Lin et al. 2021; Razzaq et al. 2023), while studies focusing on its economic outcomes remain comparatively limited. Given that environmental protection can be seen as an investment in human capital (Zivin and Neidell 2012), our research explores the microeconomic implications of CEPI through the lens of labor productivity.
Labor productivity serves as a critical measure of economic performance, capturing the efficiency of labor inputs in generating goods and services (Chang et al. 2016). Prior research has examined the determinants of labor productivity from multiple perspectives, such as technological advancement (Solow 1956), worker quality (Schultz 1961), and human resource management (Datta et al. 2005), while recent research increasingly focusing on the impact of environmental quality on worker labor performance (Zivin and Neidell 2012; Chang et al. 2016; He et al. 2019). At the local government level, the factors affecting labor productivity mentioned above are constrained by poor local governance,...