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The Prevalence and Effects of Occupational Licensing

Author

Listed:
  • Kleiner, Morris M.

    () (University of Minnesota)

  • Krueger, Alan B.

    () (Princeton University)

Abstract

This study provides the first nation-wide analysis of the labor market implications of occupational licensing for the U.S. labor market, using data from a specially designed Gallup survey. We find that in 2006, 29 percent of the workforce was required to hold an occupational license from a government agency, which is a higher percentage than that found in studies that rely on state-level occupational licensing data. Workers who have higher levels of education are more likely to work in jobs that require a license. Union workers and government employees are more likely to have a license requirement than are nonunion or private sector employees. Our multivariate estimates suggest that licensing has about the same quantitative impact on wages as do unions – that is about 15 percent, but unlike unions which reduce variance in wages, licensing does not significantly reduce wage dispersion for individuals in licensed jobs.

Suggested Citation

  • Kleiner, Morris M. & Krueger, Alan B., 2008. "The Prevalence and Effects of Occupational Licensing," IZA Discussion Papers 3675, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3675
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    References listed on IDEAS

    as
    1. Richard B. Freeman & Morris M. Kleiner, 1999. "Do Unions Make Enterprises Insolvent?," ILR Review, Cornell University, ILR School, vol. 52(4), pages 510-527, July.
    2. Victor R. Fuchs & Alan B. Krueger & James M. Poterba, 1998. "Economists' Views about Parameters, Values, and Policies: Survey Results in Labor and Public Economics," Journal of Economic Literature, American Economic Association, vol. 36(3), pages 1387-1425, September.
    3. repec:eee:labchp:v:2:y:1986:i:c:p:1139-1181 is not listed on IDEAS
    4. Carl Shapiro, 1986. "Investment, Moral Hazard, and Occupational Licensing," Review of Economic Studies, Oxford University Press, vol. 53(5), pages 843-862.
    5. Richard B. Freeman, 1982. "Union Wage Practices and Wage Dispersion within Establishments," ILR Review, Cornell University, ILR School, vol. 36(1), pages 3-21, October.
    6. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-475, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    occupational licensing; regulation; wages;

    JEL classification:

    • J8 - Labor and Demographic Economics - - Labor Standards

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