Perpetuating Inequality: What Salary History Bans Reveal About Wages

49 Pages Posted: 24 Jun 2020

See all articles by James E. Bessen

James E. Bessen

Technology & Policy Research Initiative, BU School of Law

Chen Meng

Technology & Policy Research Initiative, Boston University

Erich Denk

Boston University - Technology & Policy Research Initiative

Date Written: June 1, 2020

Abstract

Pay gaps for women and minorities have persisted after accounting for observable differences. Why? If employers can access applicants’ salary histories while bargaining over wages, they can take advantage of past inequities, perpetuating inequality. Recently, a dozen US states have banned employer access to salary histories. We analyze the effects of these salary history bans (SHBs) on employer wage posting and on the pay of job changers in a difference-in-differences design. Following SHBs, employers posted wages more often and increased pay for job changers by about 5%, with larger increases for women (8%) and African-Americans (13%). Salary histories appear to account for much of the persistence of residual wage gaps.

Keywords: gender pay gap; salary history ban; labor discrimination, wage inequality, wage bargaining

JEL Classification: J16, J31, J71, J78

Suggested Citation

Bessen, James E. and Meng, Chen and Denk, Erich, Perpetuating Inequality: What Salary History Bans Reveal About Wages (June 1, 2020). Available at SSRN: https://ssrn.com/abstract=3628729 or http://dx.doi.org/10.2139/ssrn.3628729

James E. Bessen (Contact Author)

Technology & Policy Research Initiative, BU School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Chen Meng

Technology & Policy Research Initiative, Boston University ( email )

Boston, MA 02215
United States

Erich Denk

Boston University - Technology & Policy Research Initiative ( email )

Boston, MA 02215
United States

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