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Wages, performance and harassment

Mehmet Bac

Journal of Economic Behavior & Organization, 2018, vol. 145, issue C, 232-248

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.

Keywords: Contracts; Employer liability; Moral hazard; Incomplete information (search for similar items in EconPapers)
JEL-codes: D86 K31 M52 J33 J79 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:jeborg:v:145:y:2018:i:c:p:232-248