The Costs of Hidden Workplace Harassment

Using natural language processing techniques and millions of anonymous employee reviews, I propose a novel measure of workplace harassment in U.S. firms and investigate its causal effects on innovation and other firm-level outcomes. I exploit the quasi-experimental reduction in workplace harassment caused by changes in non-disclosure agreement (NDA) laws across U.S. states and document a negative impact of workplace harassment on innovation. Firms with previously higher levels of workplace harassment experience a significant increase in their innovation output following these regulations. The documented effect is significantly more pronounced for firms with minority representation in their inventor teams along the gender, race, and ethnicity dimensions. Underlying these effects are improvements in team capital and collaborative dynamics, as the positive changes in the workplace climate lead to significant increases in inventor productivity, as well as retention and entry rates of skilled workers.