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Occupational regulation and labour market fluidity in ten European Countries

Author

Listed:
  • Zoltán Hermann

    (HUN-REN Centre for Economic and Regional Studies; Corvinus University of Budapest)

  • Júlia Varga

    (HUN-REN Centre for Economic and Regional Studies)

Abstract

This paper examines the impact of occupational regulation, a labour market institution affecting many workers, on labour market fluidity in Europe. Using data from 10 European countries, we estimate the effect of occupational regulation on occupational mobility (transition to another occupation) and job loss (transition from employment to unemployment). By leveraging the variation in regulation across countries within an occupation, we identify the regulation effect using a two-way fixed effects approach. We also compare the effects of more and less stringent forms of regulation. The results show that occupational regulation substantially decreases occupational mobility, while its effect on job loss is ambiguous. More stringent regulation (occupational licensing) has a more substantial effect than weaker requirements.

Suggested Citation

  • Zoltán Hermann & Júlia Varga, 2024. "Occupational regulation and labour market fluidity in ten European Countries," KRTK-KTI WORKING PAPERS 2418, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:2418
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    References listed on IDEAS

    as
    1. Susanne Prantl & Alexandra Spitz‐Oener, 2009. "How does entry regulation influence entry into self‐employment and occupational mobility?1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(4), pages 769-802, October.
    2. Janna E. Johnson & Morris M. Kleiner, 2020. "Is Occupational Licensing a Barrier to Interstate Migration?," American Economic Journal: Economic Policy, American Economic Association, vol. 12(3), pages 347-373, August.
    3. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
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    5. Peter Q. Blair & Bobby W. Chung, 2019. "How Much of Barrier to Entry is Occupational Licensing?," British Journal of Industrial Relations, London School of Economics, vol. 57(4), pages 919-943, December.
    6. Petrik Runst, 2018. "The effect of occupational licensing deregulation on migrants in the German skilled crafts sector," European Journal of Law and Economics, Springer, vol. 45(3), pages 555-589, June.
    7. repec:hum:wpaper:sfb649dp2009-034 is not listed on IDEAS
    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.
    9. Morris M Kleiner & Evan J Soltas, 2023. "A Welfare Analysis of Occupational Licensing in U.S. States," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(5), pages 2481-2516.
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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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