Salary History Bans and Unravelling

51 Pages Posted: 11 May 2022

See all articles by Bo Cowgill

Bo Cowgill

Columbia University - Columbia Business School

Amanda Y. Agan

Rutgers University, Department of Economics

Laura Gee

Tufts University; IZA

Date Written: May 9, 2022

Abstract

New laws such as salary history bans aim to reduce historical inequalities by limiting the information employers can seek. Although employers are forbidden from asking, workers are free to disclose information voluntarily. We study the impact of the ban through the novel lens of unravelling and disclosure theory. Our theoretical framing of these laws shows the importance of the psychological costs of disclosing, and of the coarseness of employer beliefs about gender differences. We then report the results of a large survey of the US workforce that we conducted to address theoretical questions around voluntary disclosure, salary history, and related bans. We find that unravelling is underway in the US job market. A large percentage of workers (28\%) volunteer salary history, even when a ban prevents employers from asking. An additional 47\% will disclose if enough rival job candidates disclose. Between November 2019 and May 2021, unprompted volunteering of salaries increased by about 6-8 percentage points. Men are more likely to volunteer, particularly when they believe that rival candidates are volunteering. Women report higher psychological costs of disclosing, and are more likely to resist unravelling (even as rival candidates disclose). Consistent with disclosure theory, workers act as if silence about their current salary is a negative signal.

Suggested Citation

Cowgill, Bo and Agan, Amanda Y. and Gee, Laura, Salary History Bans and Unravelling (May 9, 2022). Available at SSRN: https://ssrn.com/abstract=4104743

Bo Cowgill (Contact Author)

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Amanda Y. Agan

Rutgers University, Department of Economics ( email )

New Jersey Hall
75 Hamilton St
08901, NJ Princeton 08540
United States

HOME PAGE: http://https://sites.google.com/site/amandayagan/

Laura Gee

Tufts University ( email )

Medford, MA 02155
United States

IZA

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

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