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ESG rating and labor income share: Firm-level evidence

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Listed:
  • Zhao, Shuai
  • Chen, Yan

Abstract

This study investigates the relationship between ESG (environmental, social, and governance) ratings and labor share at the firm level. Using data from Chinese A-share listed firms from 2011 to 2021, we find a significantly positive relationship between the two. Furthermore, we document that state-owned enterprises do not demonstrate a strong sense of political and social responsibility in their employee recruitment projects, while companies with high ESG ratings in East China could increase their labor share due to less stringent financial constraints. Finally, the employment-creation effect of ESG ratings is one of the important channels for improving labor share. Considering the increasing awareness of ESG concepts and the boom in ESG investing, our findings hold significant relevance for employees, directors, investors, and public policymakers.

Suggested Citation

  • Zhao, Shuai & Chen, Yan, 2024. "ESG rating and labor income share: Firm-level evidence," Finance Research Letters, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:finlet:v:63:y:2024:i:c:s154461232400391x
    DOI: 10.1016/j.frl.2024.105361
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    References listed on IDEAS

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    Cited by:

    1. Zhang, Xiaoru & Jiang, Wei & Wu, Chuanqing, 2026. "Does data factor marketisation effect labour income share? Evidence from Chinese A-share listed companies," Journal of Business Research, Elsevier, vol. 206(C).
    2. Li, Gang & Ma, Yan, 2025. "Labor contract law, labor income share, and corporate risk-taking," Finance Research Letters, Elsevier, vol. 85(PC).
    3. Wu, Liangpeng & Tang, Yujing & Meng, Lei & Zhu, Qingyuan & Zhou, Dequn, 2025. "Navigating ESG rating divergence: Implications for labor investment efficiency and firm adaptation strategy," Global Finance Journal, Elsevier, vol. 67(C).
    4. Malik Abu Afifa & Nha Minh Nguyen & Dao Truc Thi Vo & Duong Van Bui & Hien Vo Van, 2025. "Environmental, social and governance practices: A new perspective from Asian developing countries," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(1), pages 1079-1095, January.
    5. Liu, Tao & Zhuang, Xintian & Li, Mingcao, 2025. "How supplier concentration influences labor income share: Evidence from China," Finance Research Letters, Elsevier, vol. 73(C).
    6. Zhang, Yiling & Li, Dandan, 2025. "Rookie independent directors and corporate ESG Performance: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 103(C).
    7. Tingwei Chen & Feng Yang & Zongbin Zhang, 2025. "Environmental, Social and Governance Performance: Can It Resolve Enterprises Overcapacity?," SAGE Open, , vol. 15(3), pages 21582440251, July.
    8. Sun, Jiaqi & Li, Ping & Wang, Yunqiao, 2025. "Can the pilot policy of returnee entrepreneurship promote labor income?," Finance Research Letters, Elsevier, vol. 85(PC).

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    Keywords

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    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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