Salary History Bans: Strategic Disclosure by Job Applicants and the Gender Pay Gap

97 Pages Posted: 9 Feb 2022

See all articles by Sourav Sinha

Sourav Sinha

Yale University, Department of Economics

Date Written: January 24, 2022

Abstract

I study the effects of US salary history bans which restrict employers from inquiring about job applicants’ pay history during the hiring process, but allow candidates to voluntarily share information. Using a difference-in-differences design, I show that these policies narrowed the gender pay gap significantly by 2 p.p., driven almost entirely by an increase in female earnings. The bans were also successful in weakening the auto-correlation between current and future earnings, especially among job-changers. I provide novel evidence showing that when employers could no longer nudge candidates for information, the likelihood of voluntarily disclosing salary history decreased among job applicants and by 2 p.p. more among women. I then develop a salary negotiation model with asymmetric information, where I allow job applicants to choose whether to reveal pay history, and use this framework to explain my empirical findings on disclosure behavior and gender pay gap.

Keywords: Salary History Ban, Gender Pay Gap, Asymmetric Information, Information Disclosure

JEL Classification: J08, J31, J38, J78

Suggested Citation

Sinha, Sourav, Salary History Bans: Strategic Disclosure by Job Applicants and the Gender Pay Gap (January 24, 2022). Available at SSRN: https://ssrn.com/abstract=4025580 or http://dx.doi.org/10.2139/ssrn.4025580

Sourav Sinha (Contact Author)

Yale University, Department of Economics ( email )

HOME PAGE: http://sites.google.com/view/souravsinha-econ

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