Values and Inequality: Prosocial Jobs and the College Wage Premium

Abstract

Employers often recruit workers by invoking corporate social responsibility, organizational purpose, or other claims to a prosocial mission. In an era of substantial labor market inequality, commentators typically dismiss these claims as hypocritical: prosocial employers often turn out to be no more generous with low-wage workers than their competitors are. In this paper, we argue that prosocial commitments in fact inadvertently reduce earnings inequality, but through a different channel than generosity. Building on research on job values, we hypothesize that college graduates are more willing than nongraduates to sacrifice pay for prosocial impact. So when employers appeal to prosocial values, they can disproportionately reduce pay for higher-educated workers. We test this theory with data on online US job postings. We find that prosocial jobs requiring a college degree post lower pay than standard postings with exactly the same job requirements, whereas pay at prosocial jobs not requiring a college degree pay no differently from other low-education jobs. This gap reduces the aggregate college wage premium by around 5 percent. We present a variety of supplementary evidence using labor market data, worker survey responses, and a vignette experiment with hiring managers. The findings reveal an unintended consequence of employers' embrace of prosocial values: it offsets macro-level inequality.

Rapid wage growth at the bottom has offset rising US inequality

“…The DINA data were downloaded from Gabriel Zucman’s website ( https://gabriel-zucman.eu/usdina/ ) ( 55 ). The code and publicly available data for this paper can be accessed on the Open Science Framework (OSF) at https://osf.io/x42nf/ , ( 56 ).…”

Three essays on labor market mobility and inequality.

“…to their theoretical and empirical implications, all three chapters shed light on relevant contemporary debates on work and employment. Given the rising relevance of individuals' changing and quitting jobs en masse, evidence-based research on understanding preferable jobs is paramount (e.g.,Wilmers & Zhang, 2022). In this regard, we provide insights as to what kind of nonpecuniary rewards might motivate individuals to work (Chapter 1) and what kind of considerations might make individuals leave their firms (Chapter 2).…”