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Employee Screening Procedures: New Regulations and New Evidence

Paper Session

Sunday, Jan. 8, 2017 3:15 PM – 5:15 PM

Hyatt Regency Chicago, Michigan 1A & 1B
Hosted By: American Economic Association
  • Chair: Abigail Wozniak, University of Notre Dame

No More Credit Score: Employer Credit Check Bans and Signal Substitution

Robert Clifford
,
Federal Reserve Bank of Boston
Daniel Shoag
,
Harvard University

Abstract

In the past decade, most states have banned or have considered banning the use of credit checks in hiring decisions, a screening tool that is widely used by employers. Using new Equifax data on employer credit checks, the Federal Reserve Bank of New York Consumer Credit Panel/Equifax, and the LEHD Origin-Destination Employment data, we show that these bans increased employment of residents in the lowest credit score areas. The largest gains occurred in higher-paying jobs and in the government sector. At the same time, using a large database of job postings, we show that employers increased their demands for other signals of applicants’ job performance, like education and experience. On net, the changes induced by these bans generate relatively worse outcomes for those with mid-to-low credit scores, for those under 22 years old, and for Blacks, group commonly thought to benefit from such legislation.

See Me, Not the Disability: An Investigation on Job Search Outcomes for People With Disabilities

Mason Ameri
,
Rutgers University
Douglas Kruse
,
Rutgers University
Lisa Schur
,
Rutgers University
Meera Adya
,
Syracuse University
Patrick McKay
,
Rutgers University
Adrienne Colella
,
Tulane University

Abstract

People with disabilities have low employment levels, and previous research suggests that employer discrimination is a contributing factor. Following prior field experiments on employer screening, preliminary evidence is presented from an audit study that submitted applications in response to 12,032 advertised software developer (high-skill) and data-entry clerk (low-skill) positions from well-qualified hypothetical applicants. One-quarter of the cover letters disclosed that the applicant has a spinal cord injury, one-quarter disclosed post traumatic stress disorder (PTSD), one-quarter disclosed a hearing impairment, and one-quarter did not mention disability. These specific disabilities were chosen because they would not be expected to limit productivity in either occupation, helping rule out job-fit explanations for any differences in employer responses. Half of the resumes in both high and low skill occupations depict novice applicants, and half depict experienced ones. The results shed light on the role of employer screening in job search outcomes for applicants with disabilities, while comparisons by disability type and experience level can provide evidence on social cognition theories that underlie screening decisions. In contrast to findings from a prior study on the accounting profession that used a similar method, preliminary evidence based on half the sample (n=6,016) does not show gaps by disability status in employer interest in job applicants of software developer and data entry clerk occupations. The preliminary results may indicate the leveling effect of technology on job opportunities for people with disabilities in these occupations.

Banning the Box: The Labor Market Consequences of Bans on Criminal Record Screening in Employment Applications

Daniel Shoag
,
Harvard University
Stan Veuger
,
American Enterprise Institute

Abstract

Many localities have in recent years limited the use of questions about criminal history in hiring, or "banned the box." We show that these bans increased employment of residents in high-crime neighborhoods by up to 4%. This effect can be seen both across and within census tracts, in employment levels as well as in commuting patterns. The increases are particularly large in the public sector and in lower-wage jobs. We also establish that employers respond to Ban the Box measures by raising experience requirements. On net, black men benefit from the changes.

Analyzing the Labor Market Outcomes of Occupational Licensing

Maury Gittleman
,
U.S. Bureau of Labor Statistics
Mark A. Klee
,
U.S. Census Bureau
Morris M. Kleiner
,
University of Minnesota

Abstract

Recent assessments of occupational licensing have shown varying
effects of the institution on labor market outcomes. This study revisits the relationship between occupational licensing and labor market outcomes by analyzing a new topical module to the Survey of Income and Program Participation (SIPP). Relative to previously available data, the topical module offers more detailed information on occupational licensing attainment from a governmental agency, with larger sample sizes and access to richer sets of person-level characteristics. We exploit this larger and more detailed data set to examine the labor market outcomes of occupational licensing and how workers obtain these licenses from government. More specifically, we analyze whether there is evidence of a licensing wage premium, and how this premium varies with aspects of the regulatory regime such as the requirements to obtain a license or certification and the level of
government oversight. After controlling for observable
heterogeneity, including occupational status, we find that those with a license earn higher pay, are more likely to be employed, and have a higher probability of retirement and pension plan offers.
Discussant(s)
Jeffrey Clemens
,
University of California-San Diego
Jennifer Doleac
,
University of Virginia
Amanda Agan
,
Rutgers University
Abigail Wozniak
,
University of Notre Dame
JEL Classifications
  • J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers
  • K2 - Regulation and Business Law