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Occupational Licensing and the Earnings Premium in the United States: Updated Evidence from the Current Population Survey

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  • Samuel J. Ingram

Abstract

Using survey data from 2015 to 2018, this article analyses the occupational licensing wage premium in the United States. The estimates show a robust 4–6 per cent wage differential for licensed workers. This premium is robust to careful control for location/local labour market effects and occupation effects. The premium is also positive for the majority of individual occupations and groups of occupations estimated. Similar results are found using additional techniques, including a matching estimator and an analysis of border metropolitan statistical areas.

Suggested Citation

  • Samuel J. Ingram, 2019. "Occupational Licensing and the Earnings Premium in the United States: Updated Evidence from the Current Population Survey," British Journal of Industrial Relations, London School of Economics, vol. 57(4), pages 732-763, December.
    • Handle: RePEc:bla:brjirl:v:57:y:2019:i:4:p:732-763
    DOI: 10.1111/bjir.12469
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    References listed on IDEAS

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    1. Morris M. Kleiner & Alan B. Krueger, 2010. "The Prevalence and Effects of Occupational Licensing," British Journal of Industrial Relations, London School of Economics, vol. 48(4), pages 676-687, December.
    2. Morris M. Kleiner & Alan B. Krueger, 2013. "Analyzing the Extent and Influence of Occupational Licensing on the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages 173-202.
    3. Morris M. Kleiner, 2006. "Licensing Occupations: Ensuring Quality or Restricting Competition?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number lo.
    4. Maury Gittleman & Morris M. Kleiner, 2016. "Wage Effects of Unionization and Occupational Licensing Coverage in the United States," ILR Review, Cornell University, ILR School, vol. 69(1), pages 142-172, January.
    5. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
    6. Maury Gittleman & Mark A. Klee & Morris M. Kleiner, 2018. "Analyzing the Labor Market Outcomes of Occupational Licensing," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 57(1), pages 57-100, January.
    7. Robert J. Thornton & Edward J. Timmons, 2013. "Licensing One of the World's Oldest Professions: Massage," Journal of Law and Economics, University of Chicago Press, vol. 56(2), pages 371-388.
    8. Morris M. Kleiner & Evgeny Vorotnikov, 2017. "Analyzing occupational licensing among the states," Journal of Regulatory Economics, Springer, vol. 52(2), pages 132-158, October.
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    Citations

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    Cited by:

    1. Bredtmann, Julia & Otten, Sebastian & Rammert, Timo, 2024. "The effect of occupational deregulation on wage premiums," Ruhr Economic Papers 1134, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Kihwan Bae & Edward Timmons, 2023. "Now You Can Take It with You: Effects of Occupational Credential Recognition on Labor Market Outcomes," Working Papers 23-03, Department of Economics, West Virginia University.
    3. Alicia Plemmons, 2022. "Occupational licensing's effects on firm location and employment in the United States," British Journal of Industrial Relations, London School of Economics, vol. 60(4), pages 735-760, December.
    4. Ilya Kukaev & Edward J. Timmons, 2024. "Certifiably employable? Occupational regulation and unemployment duration," Southern Economic Journal, John Wiley & Sons, vol. 90(4), pages 1035-1059, April.
    5. Alicia Plemmons & Darwyyn Deyo & Walker Rhine, 2026. "The industry costs and benefits of occupational licensing: measuring differences in establishment behavior and quality," Journal of Regulatory Economics, Springer, vol. 69(1), pages 1-25, December.
    6. Baird Matthew D. & Bozick Robert & Zaber Melanie A., 2022. "Beyond traditional academic degrees: The labor market returns to occupational credentials in the United States," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 11(1), pages 1-38, January.
    7. Omar Bamieh & Andrea Cintolesi & Mario Pagliero, 2024. "Estimating the returns to occupational licensing: evidence from regression discontinuities at the bar exam," Temi di discussione (Economic working papers) 1440, Bank of Italy, Economic Research and International Relations Area.
    8. Chung, Bobby W., 2022. "The costs and potential benefits of occupational licensing: A case of real estate license reform," Labour Economics, Elsevier, vol. 76(C).
    9. Tingting Zhang & Morley Gunderson, 2020. "Impact of Occupational Licensing on Wages and Wage Inequality: Canadian Evidence 1998–2018," Journal of Labor Research, Springer, vol. 41(4), pages 338-351, December.
    10. Ilya Kukaev & Edward J. Timmons, 2023. "Certifiably employable?: The effects of occupational regulation on unemployment duration," Working Papers 23-02, Department of Economics, West Virginia University.
    11. Andres Marroquin & Edward J. Timmons, 2024. "Economic values, support of labor unions, and salience of occupational licensing in the European Union," Economics Bulletin, AccessEcon, vol. 44(4), pages 1338-1347.
    12. Dustin Chambers & Colin O’Reilly, 2022. "The economic theory of regulation and inequality," Public Choice, Springer, vol. 193(1), pages 63-78, October.
    13. Luo, Jianbo Jeff, 2022. "Occupational licensing and job satisfaction: Evidence from US data," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 101(C).
    14. Mengjie Lyu & Tingting Zhang & Hua Ye, 2023. "Labour market impacts of occupational licensing and delicensing: New evidence from China," British Journal of Industrial Relations, London School of Economics, vol. 61(4), pages 895-921, December.
    15. Aaron Yelowitz & Samuel J. Ingram, 2024. "How does occupational licensing affect entry into the medical field? An examination of emergency medical technicians," Southern Economic Journal, John Wiley & Sons, vol. 91(1), pages 38-61, July.
    16. Yelowitz, Aaron & Ingram, Samuel J., 2021. "How Does Occupational Licensing Affect Entry into the Medical Field? An Examination of EMTs," IZA Discussion Papers 14071, IZA Network @ LISER.
    17. Massimiliano Tani, 2021. "Occupational Licensing and the Skills Mismatch of Highly Educated Migrants," British Journal of Industrial Relations, London School of Economics, vol. 59(3), pages 730-756, September.
    18. Matthew Baird & Paul Ko & Nikhil Gahlawat, 2024. "Skill Signals in a Digital Job Search Market and Duration in Employment Gaps," Journal of Labor Research, Springer, vol. 45(3), pages 403-435, September.

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