The Sustainability Wage Gap

The Sustainability Wage Gap

Philipp Krueger, Daniel Metzger, Jiaxin Wu

Series number :

Serial Number: 

Date posted :

January 05 2021

Last revised :

September 02 2023
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  • wages • 
  • Wage differentials • 
  • Allocation of Talent • 
  • human capital • 
  • Sustainability • 
  • ESG • 
  • firm value

Using administrative employer-employee matched data, we provide evidence that workers earn substantially lower wages in more sustainable firms. We hypothesize that this Sustainability Wage Gap arises because workers with preferences for sustainability accept lower wages to work in more environmentally sustainable firms.

Examining both cross-sectional and time-series heterogeneity, we find that the wage gap is larger for high-skilled workers and increasing over time. Using a battery of additional tests, we argue that our results are difficult to reconcile with many alternative interpretations suggested in prior research.


Real name:
Jiaxin Wu