Rise of Conscious Consumers: Impacts of Corporate Workplace Equality on Household Spending*

Abstract

We examine the impact of corporate workplace equality on household purchase decisions, as well as the underlying mechanisms. We first construct a measure of corporate workplace equality based on textual analysis of equal employment opportunity (EEO) statements in online job postings. We validate this measure by demonstrating its predictive power for future employment discrimination lawsuits and identifying the costs of deterring low-equality firms from mimicking high-equality peers. We then show a positive correlation between corporate workplace equality and consumer spending and propose two economic channels: preference and innovation. To establish the preference channel, we demonstrate that the correlation between corporate workplace equality and consumer spending increases when consumer preferences experience exogenous shocks in major social events, such as the #MeToo Movement in 2017 and the Black Lives Matter Movement in 2020. This effect is particularly strong among gender and racial minority groups. To establish the innovation channel, we demonstrate a higher correlation between corporate workplace equality and consumer spending among more innovative industries and show that corporate workplace equality can predict innovation efficiency in terms of patent quantity, quality, originality, and generality. Overall, while existing OM studies focus on how practices of diversity, equity, and inclusion (DEI) affect corporate performance from the supply (producer) side, we fill the void in this literature by providing a complementary perspective from the demand (consumer) side.

Keywords: Corporate Workplace Equality, Conscious Consumers, Textual Analysis

JEL Classification: D12, D63, G30