The Role of Income Distribution in the Diffusion of Corporate Social Responsibility

The purpose of this paper is to investigate the link between corporate social responsibility (CSR) growth and income distribution. We present a general equilibrium model where social responsibility enters both firms' and consumers' decisions. At equilibrium, different degrees of CSR diffusion may arise. We study the conditions under which there exists a virtuous circle which ties increases in the diffusion of CSR to reductions in income inequality. Under certain circumstances, any policy which promotes CSR diffusion induces a reduction in income inequality. By contrast, when such conditions are not satisfied, only redistributive policies may generate the virtuous circle.