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Insiders, Outsiders, and Involuntary Unemployment: Sexual Harrassment Exacerbates Gender Inequality

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  • Chen, Daniel L.
  • Sethi, Jasmin

Abstract

Sexual harassment is perceived to be a major impediment to female labor force participation. We use the random assignment of U.S. federal judges setting geographically-local precedent, and the fact that judges’ biographies predict decisions in sexual harassment cases, to document the causal impact of forbidding sexual harassment. Consistent with an insider-outsider theory of involuntary unemployment, but in contrast to a mandated benefits theory of employment protections, pro-plaintiff sexual harassment precedent spurred the adoption of sexual harassment human resources policies, encouraged entry of outsiders, and reduced gender inequality in labor supply and wages among the population. These effects were comparable to the effects of the Equal Employment Opportunity Act and greatest in the construction industry, which was heavily affected by sexual harassment litigation.

Suggested Citation

  • Chen, Daniel L. & Sethi, Jasmin, 2016. "Insiders, Outsiders, and Involuntary Unemployment: Sexual Harrassment Exacerbates Gender Inequality," TSE Working Papers 16-687, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:30653
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    Cited by:

    1. Chen Daniel L., 2019. "Law and Literature: Theory and Evidence on Empathy and Guile," Review of Law & Economics, De Gruyter, vol. 15(1), pages 1-33, March.

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    More about this item

    Keywords

    Gender discrimination; microaggression; trauma; safe spaces; prejudice;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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