Hidden Performance: Salary History Bans and the Gender Pay Gap. Issue 3 (16th February 2022)

• Record Type: Journal Article
• Authors: Davis, Jesse; Ouimet, Paige; Wang, Xinxin
• Editors: Erel, Isil
• Is Part Of: Review of corporate finance studies. Volume 11:Issue 3(2022)
• Page Start: 511
• Page End: 553
• Publication Date: 2022-02-16
• Subjects: Corporations -- Finance -- Periodicals; 338.6041
• DOI: 10.1093/rcfs/cfac007
• Languages: English
• ISSNs: 2046-9128

Abstract

Abstract: As of 2019, salary history bans were enacted by 17 states and Puerto Rico with the stated purpose of reducing the gender pay gap. We argue that salary history bans may negatively affect wages as employers lose an informative signal of worker productivity. We empirically evaluate these laws using a large panel dataset of disaggregated wages covering all public-sector employees in 36 states and find, on average, that salary history bans lead to a 3% decrease in new-hire wages. We find no decrease in the gender pay gap in the full sample and a modest 1.5% increase in the relative wages of women, as compared to men, among new hires most likely to have experienced gender discrimination historically.