The Unintended Consequences of Employer Credit Check Bans for Labor Markets
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.
JEL codes: J08, J23, J63, J78.
Keywords: vacancies, credit score, credit check.
Suggested citation: Cortés, Kristle R., Andrew Glover, and Murat Tasci. 2019. “The Unintended Consequences of Employer Credit Check Bans for Labor Markets.” Federal Reserve Bank of Cleveland, Working Paper no. 19-05. https://doi.org/10.26509/frbc-wp-201905.