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Title: Salary History Bans and Healing Scars from Past Recessions

Citation Type: Miscellaneous

Publication Year: 2021

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Abstract: In a recession, increased competition forces inexperienced job market entrants to accept lower wages than those who start their careers during an economic boom. Yet despite years of improvement in labor market conditions following a recession, a wage disparity, known as scarring, persists between these cohorts. I use Salary History Ban laws (SHBs) to test whether job mobility for scarred workers is constrained because employers screen on prior compensation. For scarred workers who began their careers during a moderate-to-severe recession, or a 5 percentage point higher state unemployment rate, I find SHBs increase job mobility by 0.6%, hourly wages by 3.4%, and weekly earnings by 5.45% relative to workers who graduated in baseline labor market conditions. These estimates represent a substantial reduction in the original scarring effect and provide evidence this effect partially persists due to salary disclosure.

Url: https://sites.temple.edu/mask/files/2021/07/Mask2020.pdf

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Authors: Mask, Joshua

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Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

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