Ex-offender barriers to employment: racial disparities in labor markets with asymmetric information

Abstract

This paper focuses on barriers to ex-offender employment and the potential impact of ‘ban the box’ policies that restrict employers' access to criminal history records. We argue policies aimed at creating closed records systems may inadvertently cause statistical discrimination because employers become prone to discriminate against applicants with observable demographic characteristics, such as race, similar to those of ex-offenders. Such policies may lead to adverse selection because applicants willing to accept low wages are often more likely to be those with lower productivity. Because higher productivity workers seek labor markets where they can distinguish themselves, employers have no choice but to hire lower productivity workers. We use the premises of Akerlof's theory of asymmetric information (Akerlof 1970) to suggest a theoretical framework for future studies on the effectiveness of open versus closed records policies. Finally, we focus on alternatives to closed records policies designed to eliminate the marginalization of potentially qualified workers in labor markets.