Abstract
Pay gaps for women and minorities have persisted after accounting for observable differences. Recently, a dozen US states have banned employer access to salary histories. We analyze the effects of these salary history bans (SHBs) on private employer wage posting and pay. We develop a theoretical model of firms’ choices between posting wages and bargaining, drawing out the implications of SHBs on wages for different groups of jobs. We then implement a comprehensive analysis in a difference-in-differences design, using Burning Glass job posting data in the US and the Current Population Survey. The results show that following SHBs, private employers posted wages more often and increased pay for job changers, particularly for women (6.2%) and non-whites (5.8%). The results imply that when employers can access applicants’ salary histories while bargaining over wages, they can take advantage of past inequities, perpetuating inequality. There is also no evidence of adverse selection of workers overall or adverse employer reactions in the short run. Bargaining behavior and the use of salary histories appear to account for much of the difference in pay between disadvantaged job changers and others.
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Data availability
The Burning Glass Dataset (now EMSI) used in the current study is not publicly available as it contains proprietary information that the authors acquired through a license. Information on how to obtain it and reproduce the analysis is available from the corresponding author on request. The Current Population Survey and Quarterly Workforce Indicators are publicly available at IPUMS: https://cps.ipums.org/cps/index.shtml and the US Census: https://lehd.ces.census.gov/data/#qwi.
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Acknowledgements
Thanks to comments from David Autor, Kevin Bryan, Ellora Derenoncourt, Scott Hirst, Jack Hou, Kevin Lang, Ioana Marinescu, Mike Meurer, Anna Salomons, Tim Simcoe, Kathy Zeiler and participants at the ASSA, Technology & Policy Research Initiative’s seminar, the BU Law Faculty Workshop, BU Microeconomics seminar, Discrimination and Disparities seminar, the Western Economic Association, and NBER Productivity Lunch. Thanks to Bledi Taska for help with Burning Glass data and for suggesting that we look at the link between salary history bans and job posting. This work was supported by the Ewing Marion Kauffman Foundation. The contents of this manuscript are solely the responsibility of the authors.
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Bessen, J., Denk, E. & Meng, C. Perpetuating wage inequality: evidence from salary history bans. J Econ Inequal 22, 709–733 (2024). https://doi.org/10.1007/s10888-023-09610-9
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DOI: https://doi.org/10.1007/s10888-023-09610-9