Polarization, purpose and profit

Ferreira, Daniel ORCID: 0000-0003-4590-8429 and Nikolowa, Radoslawa (2025) Polarization, purpose and profit. Journal of Financial Economics, 172. ISSN 0304-405X

Text (1-s2.0-S0304405X25001552-main) - Published Version Available under License Creative Commons Attribution. Download (1MB)

• Scopus publication

Abstract

We present a model in which firms compete for workers who value nonpecuniary job attributes, such as purpose, sustainability, political stances, or working conditions. Firms adopt production technologies that enable them to offer jobs with varying levels of these desirable attributes. Firms’ profits are higher when they cater to workers with extreme preferences. In a competitive assignment equilibrium, firms become polarized and not only reflect but also amplify the polarized preferences of the general population. More polarized sectors exhibit higher profits, lower average wages, and a reduced labor share of value added. Sustainable investing amplifies firm polarization.

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	Finance
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce
Date Deposited:	17 Jul 2025 08:03
Last Modified:	11 Aug 2025 11:03
URI:	http://eprints.lse.ac.uk/id/eprint/128848

Actions (login required)

View Item