Polarizing Corporations

Emanuele Colonnelli, Associate Professor of Finance and MV Advisors Faculty Fellow

We study whether and how environmental, social, and governance (ESG) practices of large corporations affect talent allocation in Brazil’s labor market. In collaboration with Catho, Brazil's largest job platform, we conduct experimental surveys where job-seekers rate synthetic job postings, under the sole incentive of receiving real job postings that match their preferences. We use a 7-point Likert scale to measure the rating, which allows us to observe job-seekers' preferences towards characteristics of inframarginal job postings. We combine our experimental estimates with administrative matched employer-employee micro-data from the Brazilian Ministry of Labor's RAIS database and structurally estimate an equilibrium model of the labor market with two-sided heterogeneity. We use the model to quantify the distributional consequences of ESG and assess its relevance for worker sorting and socioeconomic polarization in the workplace. Funding is requested to collect ESG measures of private firms and to estimate a version of the structural model that incorporates firm ESG investment decisions.