Skip to:
  1. Main navigation
  2. Main content
  3. Footer
Working Paper

The Unintended Consequences of Employer Credit Check Bans on Labor and Credit Markets

Download pdf
Since the Great Recession, 11 states have restricted employers’ access to the credit reports of job applicants. We document that county-level vacancies decline between 9.5 and 12.4 percent after states enact these laws. Vacancies decline significantly in affected occupations but remain constant in those that are exempt, and the decline is larger in counties with many residents who are subprime borrowers. Furthermore, subprime borrowers fall behind on more debt payments and reduce credit inquiries post-ban. The evidence suggests that, counter to their intent, employer credit-check bans disrupt labor and credit markets, especially for workers who are subprime borrowers.
Topics
Lending and access to credit
Labor economics
10.20.2017ISSN 2573-7953 WP 16-25RDOI 10.26509/frbc-wp-201625r
Keywords unemployment rate, credit score, credit check
JEL Classification Codes J08, J23, J78

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Cortés, Kristle Romero, Andrew Glover, and Murat Tasci. 2017. “The Unintended Consequences of Employer Credit Check Bans on Labor and Credit Markets.” Federal Reserve Bank of Cleveland, Working Paper No. 16-25R. https://doi.org/10.26509/frbc-wp-201625r