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Occupational Licensing in the European Union: Coverage and Wage Effects

Author

Listed:
  • Maria Koumenta
  • Mario Pagliero

Abstract

We present the first EU-wide study on the prevalence and labour market impact of occupational regulation in the EU. Drawing on a new EU Survey of Regulated Occupations, we find that licensing affects about 22 percent of workers in the EU, although there is significant variability across member states and occupations. On average, licensing is associated with a 4 percent higher hourly wages. Using decomposition techniques we show that rent capture accounts for one third of this effect and the remaining is attributed to signalling. We find considerable heterogeneity in the wage gains by occupation and level of educational attainment. Finally, occupational licensing increases wage inequality. After accounting for composition effects, licensing increases the standard deviation of wages by about 0.02 log points.

Suggested Citation

  • Maria Koumenta & Mario Pagliero, 2017. "Occupational Licensing in the European Union: Coverage and Wage Effects," Carlo Alberto Notebooks 525, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:525
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    File URL: https://www.carloalberto.org/wp-content/uploads/2019/11/no.525.pdf
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    Cited by:

    1. Davud Rostam‐Afschar & Kristina Strohmaier, 2019. "Does Regulation Trade Off Quality against Inequality? The Case of German Architects and Construction Engineers," British Journal of Industrial Relations, London School of Economics, vol. 57(4), pages 870-893, December.
    2. Tingting Zhang, 2019. "Effects of Occupational Licensing and Unions on Labour Market Earnings in Canada," British Journal of Industrial Relations, London School of Economics, vol. 57(4), pages 791-817, December.
    3. Peter Q. Blair & Mischa Fisher, 2022. "Does Occupational Licensing Reduce Value Creation on Digital Platforms?," NBER Working Papers 30388, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

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    JEL classification:

    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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