Perpetuating Inequality: What Salary History Bans Reveal About Wages

Abstract

Pay gaps for women and minorities have persisted after accounting for observable differences. Why? If employers can access applicants’ salary histories while bargaining over wages, they can take advantage of past inequities, perpetuating inequality. Recently, a dozen US states have banned employer access to salary histories. We analyze the effects of these salary history bans (SHBs) on employer wage posting and on the pay of job changers in a difference-in-differences design. Following SHBs, employers posted wages more often and increased pay for job changers by about 5%, with larger increases for women (8%) and African-Americans (13%). Salary histories appear to account for much of the persistence of residual wage gaps.