Salary History and Employer Demand: Evidence from a Two-Sided Audit

111 Pages Posted: 11 Oct 2021 Last revised: 3 Nov 2021

See all articles by Amanda Y. Agan

Amanda Y. Agan

Rutgers University, Department of Economics

Bo Cowgill

Columbia University - Columbia Business School

Laura Gee

Tufts University; IZA

Date Written: September 23, 2021

Abstract

We study how salary history disclosures affect employer demand by using a novel, two-sided field experiment featuring hundreds of recruiters reviewing over 2000 job applications. We randomize the presence of salary history questions as well as candidates' disclosures. We find that employers make negative inferences about non-disclosing candidates, and view salary history as a stronger signal about competing options than worker quality. Disclosures by men (and other highly-paid candidates) yield higher salary offers, however they are negative signals of value (net of salary), and thus yield fewer callbacks. Male wage premiums are regarded as a weaker signal of quality than other sources (such as the premiums from working at higher paying firms, or being well-paid compared to peers). Recruiters correctly anticipate that women are less likely to disclose salary history at any level, and punish women less than men for silence. In our simulation of bans, we find no evidence that bans affect the gender ratio of callback choices, but find large reductions in gender inequality in salary offers among candidates called back. However, salary offers are lower overall (especially for men). A theoretical framework shows how these effects may differ by key properties of labor markets.

Suggested Citation

Agan, Amanda Y. and Cowgill, Bo and Gee, Laura, Salary History and Employer Demand: Evidence from a Two-Sided Audit (September 23, 2021). Available at SSRN: https://ssrn.com/abstract=3929578 or http://dx.doi.org/10.2139/ssrn.3929578

Amanda Y. Agan

Rutgers University, Department of Economics ( email )

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08901, NJ Princeton 08540
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HOME PAGE: http://https://sites.google.com/site/amandayagan/

Bo Cowgill (Contact Author)

Columbia University - Columbia Business School ( email )

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New York, NY 10027
United States

Laura Gee

Tufts University ( email )

Medford, MA 02155
United States

IZA

P.O. Box 7240
Bonn, D-53072
Germany

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