Corporate Social Responsibility and Employee Retention

Abstract

Utilizing administrative data from the U.S. Census, this study provides first direct empirical
evidence on the impact of corporate social responsibility (CSR) on employee retention. Exploring
both positive and negative shocks to firms’ CSR policies, our findings reveal a significant impact
on the separation rate of CSR-conscious employees within an employer, with no discernible effect
on others. Our results suggest that the employer-employee values alignment constitutes an
important non-financial job benefit that enhances employee retention. The observed CSR-related
employee retention also affects labor productivity, reinforcing the pivotal role of the employee
channel in delineating CSR’s broader impact on firm value.

Keywords: employee retention, corporate social responsibility, CSR, environmental consciousness, social consciousness, financial incentive, non-financial incentives, non-financial job benefit

JEL Classification: G13, G14, G41, G23, J31, L25, M52