No. 235: Unpacking Social Exposure

We develop a method to measure firms’ exposures to social issues from earningscall transcripts. The method applies large language models and decomposes social exposure into five domains: Employee Welfare, DEI, Stakeholder Outreach, Ethical Commitments, and Crisis Response. The measures cover over 15,000 firms across 93 countries from 2003 to 2024. The five domains exhibit distinct, sometimes opposing, associations with labor outcomes, productivity, and ESG ratings. Aggregating domains of differing sign attenuates estimated effects, consistent with the weak findings reported for composite social scores. Domains correlate with labor-market outcomes and productivity in different directions; the aggregate averages these correlations toward zero. Exploiting the Dobbs decision, which tightened abortion regulation, as a labor-supply shock, we find that firms with higher pre-Dobbs DEI exposure experienced a lower worker outflow than non-exposed firms in the same state and month.