Quid pro quo harassment, contracts and liability

Official URL: https://dx.doi.org/10.1111/caje.12642

This paper identifies two channels through which contracts induce performance and contain quid pro quo harassment: a disincentive effect raises the cost for harassers and a selection effect that attracts whistleblower types raises potential victims' resistance. An effective employer liability generates a negative relationship between wages and harassment risk. If liability is ineffective, however, employers can opt for low-wage contracts that induce high harassment and minimum internal complaints. In such environments, wages compensate exogenous harassment risks. Thus the wage-harassment risk equation can signal effectiveness of employer liability.