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.
Cortés, Kristle Romero, 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