Values and Inequality: Prosocial Jobs and the College Wage Premium

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.