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Working Paper

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.

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. 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