Corporate Social Responsibility as a Signal in the Labor Market

Eldar Dadon (eldarda@post.bgu.ac.il), Marie Claire Villeval (villeval@gate.cnrs.fr) and Ro’i Zultan (zultan@post.bgu.ac.il)
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Eldar Dadon: Ben-Gurion University of the Negev, P.O.B. 653, Beer-Sheva 84105, Israel
Marie Claire Villeval: CNRS, Université Lumière Lyon 2, Université Jean- Monnet Saint-Etienne, emlyon business school, GATE, 69007, Lyon, France. IZA, Bonn, Germany
Ro’i Zultan: Ben-Gurion University of the Negev, P.O.B. 653, Beer-Sheva 84105, Israel

No 2415, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: Working for a firm engaged in Corporate Social Responsibility (CSR) appeals to potential workers by boosting their self-image and sense of purpose. We propose an additional mechanism: CSR signals a firm’s future treatment of workers. Our model links CSR engagement with a firm’s propensity to support workers during unforeseen times of need. Under this assumption, a potential future need of the worker leads to more firms engaging in CSR and to a higher workers’ willingness to accept lower wages. Our experiment manipulates potential future needs across treatments. While the aggregate analysis does not support our theory, exploratory analysis reveals that male workers respond as predicted, whereas female workers do not. Consistently, in a risky environment, male employers increase their CSR engagement, which raises the acceptance rate among male workers. These results do not hold for female employers and workers.

Keywords: CSR; signaling; labor market; experiment (search for similar items in EconPapers)
JEL-codes: C91 D83 D91 J33 J62 M14 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-exp, nep-hrm and nep-lab
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