Employer Responses to Pay History Inquiry Bans

Abstract

We study the effects of pay history inquiry bans on employers’ pay offers and hiring practices. Using salary information on online job postings, we find that posted pay offers decline after the implementation of pay history inquiry bans. We also find some evidence that the number of online job postings increases and that postings are more likely to include salary information. We use census data on new hires and their earnings and find that, while there is a modest closing in gender pay disparity for new hires, the number of new hires declines. Overall, the early evidence on the effects of pay history inquiry bans is consistent with potential employers facing greater information asymmetry, inferring adverse selection in the job applicant pool, and offering lower pay, resulting in modest realized labor market consequences.

Keywords: Pay History Ban, Salary History, Salary History Ban, Salary History Inquiry Ban

JEL Classification: J16, J2, J23, J3, J31, J38, J48, J7, K0