Index funds and employee welfare: some exploratory insights

Abstract

This brief Article offers some reflections on the relation between the increasing prominence of large institutional investors, such as index funds, in the corporate governance of public firms, and employee welfare. The Article addresses two intertwined issues: how the growing concentration of public equity ownership in the hands of such institutional investors may have contributed to wage stagnation and the degradation of labor conditions more generally, and how the established presence of such institutional investors as stable, long-term shareholders in today’s public firms might help improving those conditions in the future.

Keywords

• index funds
• institutional investors
• labor conditions
• corporate governance
• esg