Sexual Harassment and Wages: The Paradox of Power

The wage effect of hostile working conditions, mainly in terms of sexual harassment risk in the workplace, should be considered and monitored as a first critical step in making women less vulnerable at work and increasing their bargaining power.

The Twitter #MeToo campaign pointed out that sexual harassment (SH) affects women across different industries and occupations and remains pervasive all around the world. Convention No. 190 of the International Labor Organization on violence and harassment has emphasized the importance of the right to work in a world free from violence and harassment. And the negative effects and costs of SH to female workers, employers, and the economy as a whole have been widely documented. Women who are targets of SH experience psychological, health, and identity problems that reduce their job satisfaction and physical, psychological, and professional well-being. They suffer from job displacement and higher turnover that have negative effects on their professional careers.

But very few studies analyze the impact of SH on wages. Our new INET working paper investigates the effects of SH on the wages of female employees in the European Union in light of the dynamics of power structures in different occupations and gender balances in workplaces.

There are in fact different forms of SH that do not fit the stereotypical top-down image of male managers harassing female subordinates. For example, there is horizontal SH that takes place from peers to peers and even bottom-up sexual harassment that occurs from subordinates to managers. The sociological literature identified this latter phenomenon as a consequence of threats to power from women in top positions since they threaten male dominance and broader patriarchal dynamics in workplaces.

In such cases, SH functions to reduce women to sexual objects and thus undermine their authority. In our analysis, we stress the importance of taking explicitly into consideration the gender dynamic of power in the workplace by looking at the occupations and gender composition of the workforce when studying the economic costs of SH.

We analyze individual data for female employees from the European Working Condition Survey by Eurofound and find statistically significant negative effects of SH risk on wages for female employees. In Europe, the risk of SH inflicts a wage penalty on employed women that increases gender wage gaps in formal labor markets.

This negative effect is higher for high-skilled workers compared to low-skilled workers. Moreover, the wage penalty for high-skilled white-collar women is especially large. In these cases, we empirically tested how SH risk reduces the wage premium of high occupational positions for women by considering three scenarios:

  • workplaces where most of the higher positions are held by men;
  • workplaces where most of the higher positions are held by women;
  • workplaces where there is a gender balance in top positions.

We found that the higher negative impact is pervasive in workplaces where most of the top positions are held by men. Women working in counter-stereotypical jobs both in terms of occupations (high-level positions) or in heavily masculinized workplaces are heavily penalized because they experience more severe consequences of SH risks on their wages. SH can thus be considered an extra cost for women that could disincentivize them from entering male-dominated high-skilled jobs. The consequences for formal labor markets are an increase in gender gaps and greater gender horizontal and vertical segregation.

Our empirical analysis points to complex interactions between gendered power structures that are affected by additional factors besides SH. Understanding the complex intersectionality of SH requires careful analysis of these root causes and socio-economic consequences. Ultimately, this enhanced understanding can inform policymakers, trade unions, and women’s associations to help represent women and more vulnerable workers and ensure fair and decent workplaces.

Quantitative analysis of SH remains tremendously challenging because we still do not have internationally comparable data. Moreover, the frequent normalization of violence, varying levels of awareness, and differing standards of tolerance in societies reduce the willingness of many women to define their experiences as actual sexual harassment. Differing local social norms thus are a persistent problem for researchers. Even though official statistics are sometimes just the tip of the iceberg, research has to start somewhere. Our paper attempts this for the European context.

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