Title: Firm responses to legislation on sexual harassment
by Sonia Bhalotra, Medha Chatterjee, Kanika Mahajan, Daksh Walia, Fan Wang
Abstract: As many as half of all women the world over report having experienced workplace sexual harassment (SH) at some stage in their careers. In contrast to existing work focused upon the impact that this has on women, we investigate its impact on firms. Leveraging a size-contingent policy reform in India that sought to increase reporting and redressal of sexual harassment, we demonstrate that this led to firms hiring fewer women, in particular, firms with a high baseline share of men. Thus, the policy aggravated gender segregation, a predictor of SH risk for the individual female worker. To illuminate our findings, we set out a model of firm behaviour in which we introduce sexual harassment as a drag on firm productivity. We use pre-policy firm and worker level data to calibrate the model and, using it, we produce estimates of the distortion in female share and the extent of productivity loss associated with the prevailing rate of sexual harassment. We then incorporate the policy into the model and, using our reduced form estimates of policy impacts, we recover the policy parameters and run policy counterfactuals, varying, for instance, the threshold firm size at which the policy switches on.