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Occupational Licensing in the United States

Author

Listed:
  • Janna E. Johnson

Abstract

Occupational licensing—the requirement that individuals attain a license to legally perform a specific job—is now necessary for over a fifth of the US workforce. The policy is intended to protect consumers by ensuring members of licensed occupations meet a minimum quality standard but comes at the cost of higher prices for their services. Economic theory and research support the argument that at least in some cases the costs of licensure exceed its benefits. Incumbent members of licensed occupations gain from the higher wages caused by licensure policies, creating a strong incentive for them to push for stricter regulations and resist any efforts to remove or loosen licensure requirements. However, despite bipartisan interest in licensure reform, data limitations and vast heterogeneity in licensure policies limit the usefulness of existing research in guiding its design.

Suggested Citation

  • Janna E. Johnson, 2026. "Occupational Licensing in the United States," Journal of Economic Perspectives, American Economic Association, vol. 40(1), pages 167-190, Winter.
    • Handle: RePEc:aea:jecper:v:40:y:2026:i:1:p:167-90
    DOI: 10.1257/jep.20251458
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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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