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Federal Reserve Bank of Cleveland
Working Papers (Old Series)
The Unintended Consequences of Employer Credit Check Bans on Labor and Credit Markets
Kristle Romero Cortes
Andrew Glover
Murat Tasci

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 percent 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 subprime residents. Furthermore, subprime borrowers fall behind on more debt payments and reduce credit inquiries postban. The evidence suggests that, counter to their intent, employer credit check bans disrupt labor and credit markets, especially for subprime workers.

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Kristle Romero Cortes & Andrew Glover & Murat Tasci, The Unintended Consequences of Employer Credit Check Bans on Labor and Credit Markets, Federal Reserve Bank of Cleveland, Working Papers (Old Series) 1625, 10 Jan 2018, revised 10 Jan 2018.
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Note: Second revision. First published in November 2016 and revised in October 2017.
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Keywords: unemployment rate; credit score; credit check
DOI: 10.26509/frbc-wp-201625r2
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