The effects of retaliation costs on employee whistleblowing

We study the effects of retaliation costs on employee whistleblowing. We use changes in unemployment insurance (UI) benefits to identify reductions in costs arising from a job loss. We estimate that the effect of implementing an anti-retaliation law that fully eliminates job losses for whistleblowers would increase the number of complaints by 36.9%. Further, UI benefit increases also result in more violations and penalties, indicating that the additional tips have merit. We rule out that UI benefit increases drive underlying misconduct. The effects are stronger for firms more prone to retaliation as measured by weaker employee relations, internal controls, and monitoring.