The Economics and Law of Sexual Harassment in the Workplace

Abstract

Suppose a firm has a widespread reputation for sexually harassing its employees. When a person signs up to work for such a firm, it would appear that both the firm and the worker are better off by virtue of the ‘exchange’. Is there a case then for government to ban sexual harassment in the workplace? Starting from this question, this paper constructs an argument for legislative intervention. This ‘economic approach’ is applied to other labor market practices and is used to evaluate and critique the current law concerning sexual harassment in the U.S. and other nations.