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How Do Employers Use Compensation History? Evidence from a Field Experiment

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  • Moshe A. Barach
  • John J. Horton

Abstract

We report the results of a field experiment in which treated employers could not observe the compensation history of their job applicants. Treated employers responded by evaluating more applicants and evaluating those applicants more intensively. They also responded by changing what kind of workers they evaluated: treated employers evaluated workers with 5% lower past average wages and hired workers with 13% lower past average wages. Conditional on bargaining, workers hired by treated employers struck better wage bargains for themselves.

Suggested Citation

  • Moshe A. Barach & John J. Horton, 2021. "How Do Employers Use Compensation History? Evidence from a Field Experiment," Journal of Labor Economics, University of Chicago Press, vol. 39(1), pages 193-218.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/709277
    DOI: 10.1086/709277
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    Cited by:

    1. Evangelos Mourelatos & Jaakko Simonen & Simo Hosio & Daniil Likhobaba & Dmitry Ustalov, 2024. "How has the COVID-19 pandemic shaped behavior in crowdsourcing? The role of online labor market training," Journal of Business Economics, Springer, vol. 94(9), pages 1201-1244, November.
    2. Dreber, Anna & Heikensten, Emma & Säve-Söderbergh, Jenny, 2022. "Why do women ask for less?," Labour Economics, Elsevier, vol. 78(C).
    3. Pham, Tho & Schaefer, Daniel & Singleton, Carl, 2024. "Unequal Hiring Wages and Their Impact on the Gender Pay Gap," IZA Discussion Papers 17285, Institute of Labor Economics (IZA).
    4. Choi, Bong-Geun & Choi, Jung Ho & Malik, Sara, 2023. "Not just for investors: The role of earnings announcements in guiding job seekers," Journal of Accounting and Economics, Elsevier, vol. 76(1).
    5. Mask, Joshua, 2023. "Salary history bans and healing scars from past recessions," Labour Economics, Elsevier, vol. 84(C).
    6. Horton, John J. & Johari, Ramesh & Kircher, Philipp, 2021. "Cheap Talk Messages for Market Design: Theory and Evidence from a Labor Market with Directed," LIDAM Discussion Papers CORE 2021033, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. James Bessen & Erich Denk & Chen Meng, 2024. "Perpetuating wage inequality: evidence from salary history bans," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 22(3), pages 709-733, September.
    8. Xiang Hui & Oren Reshef & Luofeng Zhou, 2023. "The Short-Term Effects of Generative Artificial Intelligence on Employment: Evidence from an Online Labor Market," CESifo Working Paper Series 10601, CESifo.
    9. Eliot L. Sherman & Raina Brands & Gillian Ku, 2023. "Dropping Anchor: A Field Experiment Assessing a Salary History Ban with Archival Replication," Management Science, INFORMS, vol. 69(5), pages 2919-2932, May.

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