Polarization, purpose and profit

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.

Authors

Publication Details

Journal
Journal of Financial Economics
Published
2025-08-04
DOI
https://doi.org/10.1016/j.jfineco.2025.104147
Citations
1
Primary Topic
Corporate Finance and Governance
Type
article
Field-Weighted Citation Impact
3.91
Controls
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article

Polarization, purpose and profit

Daniel Ferreira, Radoslawa Nikolowa
1 citations
Journal of Financial Economics
Corporate Finance and Governance
3.91
article

Polarization, purpose and profit

Daniel Ferreira, Radoslawa Nikolowa
article en
1 citations

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.

Journal of Financial EconomicsVol. 172
Openalex Percentile: Top 7%
Corporate Finance and Governance
3.91
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Polarization, purpose and profit — Daniel Ferreira, Radoslawa Nikolowa · Journal of Financial Economics (2025) | TGRS Research Map | TGRS