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Wages, performance and harassment

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  • Bac, Mehmet

Abstract

Higher wages reduce workplace harassment directly by raising the cost for harassers, indirectly by attracting agent types who file complaint if harassed. I show that low wage-high harassment combinations are neither compatible with effort objectives nor collusion-proof. Better internal compliance structures (lower cost of filing complaint, accurate and speedy investigations) reduce the wage bill and/or the frequency of harassment but also narrow the range of feasible anti-harassment targets. Wages and harassment risks should be negatively correlated across organizations with similar and effective compliance structures, whereas organizations with less effective compliance structures must pay higher wages to induce the same harassment level.

Suggested Citation

  • Bac, Mehmet, 2018. "Wages, performance and harassment," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 232-248.
  • Handle: RePEc:eee:jeborg:v:145:y:2018:i:c:p:232-248
    DOI: 10.1016/j.jebo.2017.11.008
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    References listed on IDEAS

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    1. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-580, June.
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    3. Kaushik Basu, 2003. "The Economics and Law of Sexual Harassment in the Workplace," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 141-157, Summer.
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    5. Posner, Richard A., 1999. "Employment discrimination: age discrimination and sexual harassment," International Review of Law and Economics, Elsevier, vol. 19(4), pages 421-446, December.
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    8. Emilson C. D. Silva & Charles M. Kahn & Xie Zhu, 2007. "Crime and Punishment and Corruption: Who Needs "Untouchables?"," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(1), pages 69-87, February.
    9. Joni Hersch, 2011. "Compensating Differentials for Sexual Harassment," American Economic Review, American Economic Association, vol. 101(3), pages 630-634, May.
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    More about this item

    Keywords

    Contracts; Employer liability; Moral hazard; Incomplete information;

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J79 - Labor and Demographic Economics - - Labor Discrimination - - - Other

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