The Unintended Consequences of Employer Credit Check Bans for Labor Markets

47 Pages Posted: 22 Jul 2020

See all articles by Kristle Romero Cortés

Kristle Romero Cortés

UNSW Australia Business School, School of Banking and Finance

Andrew Glover

Federal Reserve Bank of Kansas City

Murat Tasci

Federal Reserve Bank of Cleveland

Multiple version iconThere are 2 versions of this paper

Date Written: July 15, 2020

Abstract

Over the last 15 years, 11 states have restricted employers’ access to the credit reports of job applicants. We estimate that county-level job vacancies have fallen by 5.5 percent in occupations affected by these laws relative to exempt occupations in the same counties and national-level vacancies for the same occupations. Crosssectional heterogeneity suggests that employers use credit reports as signals of a worker’s ability to perform the job: vacancies fall more in counties with a large share of subprime residents, while they fall less for occupations with other commonly available signals. Vacancies fall most for occupations involving routine tasks, suggesting that credit reports contain information relevant for these types of jobs.

Keywords: vacancies, credit score, credit check

JEL Classification: E24, E65, J23, J63

Suggested Citation

Cortés, Kristle Romero and Glover, Andrew and Tasci, Murat, The Unintended Consequences of Employer Credit Check Bans for Labor Markets (July 15, 2020). Federal Reserve Bank of Kansas City Working Paper No. 20-04, Available at SSRN: https://ssrn.com/abstract=3657257 or http://dx.doi.org/10.2139/ssrn.3657257

Kristle Romero Cortés (Contact Author)

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

Sydney, NSW 2052
Australia

Andrew Glover

Federal Reserve Bank of Kansas City ( email )

1 Memorial Dr.
Kansas City, MO 64198
United States

Murat Tasci

Federal Reserve Bank of Cleveland ( email )

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

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