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Market-Based Solutions to Vital Economic Issues

Diversity, Equity & Inclusion

Kenan Institute Statement on Diversity, Equity & Inclusion

We embrace a broad definition of diversity* and recognize that diverse and equitable participation at all levels of our work is core to advancing the Kenan Institute’s mission of generating solutions to vital economic issues and stimulating economic prosperity in North Carolina and beyond. We are committed to creating a culture of empathy, compassion and authenticity that enables all people to feel heard, empowered, valued and welcomed to bring their whole selves to the workplace.

* diversity – Our definition of diversity includes race, ethnicity, sex, gender identity, sexual orientation, socioeconomic circumstance, national origin, geographic background, immigration status, ability and disability, physical characteristics, veteran status, political ideology, religious belief and age. We further celebrate a diversity of thought: ideas, perspectives and values.

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Please join us for a virtual exclusive conversation with Prime Video and Amazon Studios Chief Marketing Officer Ukonwa Ojo. This discussion is part of the Dean’s Speaker Series, hosted by Kenan-Flagler Business School Dean Doug Shackelford.

Please join us for an exclusive virtual conversation with North Carolina Secretary of Commerce Machelle Baker Sanders. This discussion is part of the Dean’s Speaker Series, hosted by Kenan-Flagler Business School Dean Doug Shackelford.

Greater focus on social justice has brought systemic inequities in the corporate sector to light, leading companies to step up their efforts in attracting and retaining a diverse workforce – but many challenges remain in implementing those goals. Following a joint report between the Kenan Institute and EY, this week’s Kenan Insight breaks down some challenges companies may face while trying to reach their diversity, equity and inclusion goals.

Urban Investment Strategies Center Director Jim Johnson, who serves as chairman of the N.C. Department of Environmental Justice and Equity Board and as a member of the task force on social, economic and environmental equity, accompanied Cooper at a press conference in support of the order at N.C. A&T State University.

The Institute for Private Capital’s newly-released interactive model that aims to help private equity leaders assess diversity, equity and inclusion (DEI) goals was featured in a report by Ernst & Young.

A recent report highlighting diversity, equity and inclusion in private equity and the launch of an accompanying interactive tool – developed by EY and IPC in collaboration with the Kenan Institute – were recently featured in Yahoo Finance. IPC Founder and Research Director Greg Brown said the model was made to help PE firms understand the link between DEI practices and recruitment and retention.

Using a linked database of Paycheck Protection Program (PPP) loans and Yelp-listed restaurants, we document that businesses owned by minority racial groups are more likely to use fintech lenders than traditional lenders. We develop a simple two-sided matching model to show that this phenomenon can be potentially attributed to differences in performance among borrowers, racial disparities in lending relationships, and race-dependent values of borrower-lender matches. Empirically, we do not find consistent evidence that operational performance is an explanation. We find that minority-owned restaurants are less likely to have lending relationships and that restaurants without lending relationships are more likely to use fintech lenders. We also find a more negative minority-non-minority gap in operational performance for fintech lenders, suggesting minority-owned businesses have higher matching values with fintech lenders. We do not find a similar pattern for first-time bank participants, community development financial institutions, credit unions, or other non-federally insured lenders. Overall, our results suggest that there are racial barriers in traditional loan distribution channels and this can be at least partially addressed by fintech lenders.

Consultants and business leaders frequently declare that a strong business case exists for firms to increase the racial/ethnic diversity of their employees. Unfortunately, the reality is that in terms of robust empirical evidence, the jury is still out. Bear with us as we explain.

Public calls for a national paid sick leave policy continue to grow in the United States. In the absence of a federal policy, many localities and states enacted their own paid sick leave mandates. We document an average increase of 1.9% in employment following the implementation of a paid sick leave policy. As predicted, workers with ex ante lower access to paid sick leave drive the employment effect, a result which holds with county-quarter fixed effects. Several non-mutually exclusive mechanisms can explain our findings. Following the implementation of a mandatory paid sick leave policy, we find a decline in labor turnover which has implications for labor productivity and, hence, labor demand. We also find results consistent with an increase in the labor supply. Finally, paid sick leave mandates are associated with an increase in household income, creating positive spillover effects on local markets and greater demand for local goods and services.

Former Kenan Institute Center for Sustainable Enterprise Research Associate and current ACTIVEST Co-founder Napoleon Wallace's latest project was recently featured in a New York Times DealBook newsletter piece. The article discusses the rating system his company is developing, which reassesses the traditional value of municipal bonds based on social and justice factors like policing, education, healthcare and affordability.

While the gender pay gap has received significant attention in recent years, little progress has been made to close it; in fact, in 2019, women still earned only 82 cents for every dollar received by their male counterparts for equal work. Policymakers in recent years have developed creative solutions aiming to close the gap, including bans prohibiting employers from asking for a job applicant’s salary history. However, in this week’s Kenan Insight, new research from our experts examines whether such well-intentioned bans are inadvertently lowering wages for all employees.

As of 2019, salary history bans have been enacted by 17 states and Puerto Rico with the stated purpose of reducing the gender pay gap. We argue that salary history bans may negatively affect wages as employers lose an informative signal of worker productivity. We empirically evaluate these laws using a large panel dataset of disaggregated wages covering all public sector employees in 36 states and find, on average, salary history bans lead to a 3% decrease in new hire wages. We find no decrease in the gender pay gap in the full sample and a modest 1.5% increase in the relative wages of women, as compared to men, among new hires most likely to have experienced gender discrimination historically.