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Analyzing the Influence of Occupational Licensing Duration and Grandfathering on Wage Determination

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  • Suyoun Han
  • Morris M. Kleiner

Abstract

The length of time from the implementation of an occupational licensing statute (i.e., licensing duration) may matter in influencing labor‐market outcomes as entry requirements evolve. In addition, states enact grandfather clauses that allow existing workers to continue employment following these regulations, while ratcheting up requirements to increase entry costs for new entrants. We analyze the labor‐market influence of the duration of occupational licensing statutes for fifteen state universally licensed occupations over a 75‐year period. We find a positive nonlinear wage effect for licensing duration. Further, we find that occupational licensing raises the wages of grandfathered workers by almost 5 percent. The licensed occupations, however, exhibit heterogeneity in outcomes. Duration of occupational licensing influences wage determination when measured over longer time periods.

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  • Suyoun Han & Morris M. Kleiner, 2021. "Analyzing the Influence of Occupational Licensing Duration and Grandfathering on Wage Determination," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(2), pages 147-187, April.
    • Handle: RePEc:bla:indres:v:60:y:2021:i:2:p:147-187
    DOI: 10.1111/irel.12274
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    Cited by:

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    2. Koumenta, Maria & Pagliero, Mario & Rostam-Afschar, Davud, 2022. "Occupational Regulation, Institutions, and Migrants’ Labor Market Outcomes," Labour Economics, Elsevier, vol. 79(C).
    3. 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.
    4. Morris M. Kleiner & Wenchen Wang, 2023. "The Labor Market Effects of Occupational Licensing in the Public Sector," Staff Report 645, Federal Reserve Bank of Minneapolis.

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