Salary History Ban: Gender Pay Gap and Spillover Effects

Abstract

We study the effect of the US salary history ban which restricts employers from inquiring about applicants' pay history during the hiring process. We find that the bans reduce gender pay gap by 4.2% points in hourly wages, and by 4.5% points in weekly earnings. About 40% of the reduction in the weekly earnings gap comes from a decrease in the earnings of mostly middle-aged men. The increase in female earnings comes from both young and middle-aged women with at least some college education. While the gender pay gap closes in the private sector, public sector gaps increase, primarily because of an increase in men's earnings. We do not find any evidence for spillover effects of public sector bans in the private sector. In contrast, salary history bans for private employers generate negative spillover effects for public sector workers by reducing their earnings. We do not detect any effects of the ban on labor market participation and turnover rates.

Keywords: salary history ban, gender pay gap, salary disclosure

JEL Classification: J01, J08, J16, J78