The Unintended Consequences of Employer Credit Check Bans for Labor Markets

44 Pages Posted: 8 Mar 2019

See all articles by Kristle Romero Cortés

Kristle Romero Cortés

UNSW Australia Business School, School of Banking and Finance

Andrew S. Glover

University of Texas at Austin

Murat Tasci

Federal Reserve Bank of Cleveland

Multiple version iconThere are 2 versions of this paper

Date Written: February 26, 2019

Abstract

Over the last decade, 11 states have restricted employers’ access to the credit reports of job applicants. We document a significant decline in county-level vacancies after these laws were enacted: Job postings fall by 5.5 percent in affected occupations relative to exempt occupations in the same county and the same occupation nationwide. Cross-sectional heterogeneity in the estimated effects suggests that employers use credit reports as signals: Vacancies fall more in counties with a large share of subprime residents, while they fall less in occupations with other commonly available signals.

Keywords: vacancies, credit score, credit check

JEL Classification: J08, J23, J63, J78

Suggested Citation

Cortés, Kristle Romero and Glover, Andrew S. and Tasci, Murat, The Unintended Consequences of Employer Credit Check Bans for Labor Markets (February 26, 2019). FRB of Cleveland Working Paper No. 19-05, Available at SSRN: https://ssrn.com/abstract=3348779

Kristle Romero Cortés

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia

Andrew S. Glover

University of Texas at Austin ( email )

2317 Speedway
Austin, TX 78712
United States

Murat Tasci (Contact Author)

Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

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