Bank of England publishes staff working paper finding wage disclosure makes job applications more responsive to pay without raising average applicant quality

The Bank of England has published Staff Working Paper No. 1,148 on wage information and applicant selection, reporting results from a field experiment that randomly added or withheld wage information in real job adverts. The paper finds that disclosing wages does not change average application volumes, but shifts applications toward higher-paying vacancies and away from lower-paying ones, while leaving average applicant quality broadly unchanged. The authors study 447 vacancies from 315 small and medium-sized firms in Addis Ababa, Ethiopia, tracking over 7,000 expressions of interest and almost 4,000 applicants who attended an assessment centre with cognitive and non-cognitive testing. Wage disclosure increased the wage sensitivity of applications, with higher-wage vacancies receiving more applicants and lower-wage vacancies receiving fewer, including an estimated increase of 1.52 expressions of interest and 1.07 assessment-centre applicants per standard deviation higher posted salary (with wage elasticity rising from 0.6 to 0.7). Measures of applicant quality were largely unaffected, with only small positive effects on non-cognitive skills; the paper attributes the lack of skill-based sorting to two-sided limited information about applicants’ skills and argues that firms’ decision not to post wages can act as insurance against unproductive matches. As a Bank of England staff working paper, it is presented as research in progress and published to elicit comments and debate, and it does not represent Bank of England policy.