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Occupational Licensing, Labor Mobility, and the Unfairness of Entry Standards

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  • Pagliero, Mario

Abstract

The combination of occupational licensing at the local market level often coexists with labor mobility across local markets. We empirically study a labor market in which a district-specific entry (licensing) examination is coupled with labor mobility across districts. Our analysis exploits a change in the grading procedure of the exam, from grading in the local district to grading in a randomly assigned different district. We document that licensing regulation leads to extreme heterogeneity across markets in admission outcomes (up to 50 percent differences in licensing exam pass rates), unfair (discriminatory) admission procedures (up to 49 percent unfair exam results), and inefficient mobility of workers. These findings, together with the estimated impact of the reform on exam outcomes and grading standards, provide the first evidence of regulatory competition based on strategic interaction among licensing boards.

Suggested Citation

  • Pagliero, Mario, 2018. "Occupational Licensing, Labor Mobility, and the Unfairness of Entry Standards," CEPR Discussion Papers 13076, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:13076
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    References listed on IDEAS

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    1. Joshua D. Angrist & Jonathan Guryan, 2004. "Teacher Testing, Teacher Education, and Teacher Characteristics," American Economic Review, American Economic Association, vol. 94(2), pages 241-246, May.
    2. Mario Pagliero & Edward Timmons, 2013. "Occupational Regulation in the European Legal Market," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 10(2), pages 243-265, August.
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    5. Pagliero, Mario, 2013. "The impact of potential labor supply on licensing exam difficulty," Labour Economics, Elsevier, vol. 25(C), pages 141-152.
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    8. Mario Pagliero, 2007. "The Impact of Potential Labor Supply on Licensing Exam Difficulty in the US Market for Lawyers," CHILD Working Papers wp19_08, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    9. Arlene S. Holen, 1965. "Effects of Professional Licensing Arrangements on Interstate Labor Mobility and Resource Allocation," Journal of Political Economy, University of Chicago Press, vol. 73, pages 492-492.
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    Cited by:

    1. Mario Pagliero, 2019. "Occupational Licensing in the EU: Protecting Consumers or Limiting Competition?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(1), pages 137-153, August.
    2. Raitano, Michele & Vona, Francesco, 2021. "Nepotism vs. Specific Skills: The effect of professional liberalization on returns to parental background of Italian lawyers," Journal of Economic Behavior & Organization, Elsevier, vol. 184(C), pages 489-505.
    3. Rostam-Afschar Davud, 2020. "Inklusive Beschäftigungspolitik: Fakten, Herausforderungen und neue Ideen zur Regulierung von Berufen," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 69(2), pages 129-139, August.

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    More about this item

    Keywords

    bar exam; Labor market regulation; legal market; licensing; occupational regulation;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services

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