Salary History and Employer Demand: Evidence from a Two-Sided Audit

Amanda Y. Agan; Bo Cowgill; Laura K. Gee

doi:10.3386/w29460

Salary History and Employer Demand: Evidence from a Two-Sided Audit

Amanda Y. Agan, Bo Cowgill & Laura K. Gee

Working Paper 29460

DOI 10.3386/w29460

Issue Date November 2021

We study how salary history disclosures affect employer demand by using a novel, two-sided field experiment featuring hundreds of recruiters reviewing over 2000 job applications. We randomize the presence of salary history questions as well as candidates' disclosures. We find that employers make negative inferences about non-disclosing candidates, and view salary history as a stronger signal about competing options than worker quality. Disclosures by men (and other highly-paid candidates) yield higher salary offers, however they are negative signals of value (net of salary), and thus yield fewer callbacks. Male wage premiums are regarded as a weaker signal of quality than other sources (such as the premiums from working at higher paying firms, or being well-paid compared to peers). Recruiters correctly anticipate that women are less likely to disclose salary history at any level, and punish women less than men for silence. In our simulation of bans, we find no evidence that bans affect the gender ratio of callback choices, but find large reductions in gender inequality in salary offers among candidates called back. However, salary offers are lower overall (especially for men). A theoretical framework shows how these effects may differ by key properties of labor markets.

The authors thank David Abrams, Kyle Coombs, Gordon Dahl, Katie Donovan, Peter Kuhn, Joanna Lahey, Raviv Murciano-Goroff, Bobby Pakzad-Hurson, Patryk Perkowski, Lamar Pierce, David Reiley, Jonah Rockoff, Nina Roussille, Chris Stanton, Olga Stoddard, Olga Shurchov and Laurina Zhang and participants at the MEER Conference, the Advances in Field Experiments Conference, the American Economic Association Annual Meeting, the Innovation and Institutions Conference, the Economic Science Association Conference, the Empirical Management Conference, Entrepreneurship and Private Enterprise Development (EPED), NBER Market Design, NBER Summer Institute (Labor), SMS Annual Conference, the Wharton People Analytics Conference, the IZA Workshop, and the seminars at Barnard College, Boston College, Clemson University, Columbia University, the Federal Reserve Board, Florida State University, George Mason University, Nuffield College (Oxford), the Strategy Research Forum (SRF), Simon Fraser, SUNY Albany, University of California Santa Barbara, University of California Santa Cruz, University of Connecticut, University of Missouri, University of Pennsylvania Law School, University of Texas at Dallas and Urbana Champagne (UIUC) for valuable feedback and comments. We also thank Hailey Brace, Karishma Chouhan, Nadine Fares, Zachary Finn, Matt Fondy and Norman Yuan for research assistance. And we acknowledge financial support from the W.E. Upjohn Institute, Facebook Research and the Kauffman Foundation. The experiments in this paper were approved by an Institutional Review Board and preregistered at the AEA RCT Registry under AEARCTR-0003088. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
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Salary History and Employer Demand: Evidence from a Two-Sided Audit

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