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Analyzing the Influence of Occupational Licensing Duration and Grandfathering on Labor Market Outcomes

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Listed:
  • 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. Adding to or raising the entry barriers are likely easier once an occupation is established and has gained influence in a political jurisdiction. States often enact grandfather clauses and ratchet up requirements that protect existing workers and increase entry costs to new entrants. We analyze the labor market influence of the duration of occupational licensing statutes for 13 major universally licensed occupations over a 75-year period. These occupations comprise the vast majority of workers in these regulated occupations in the United States. We provide among the first estimates of potential economic rents to grandfathering. We find that duration years of occupational licensure are positively associated with wages for continuing and grandfathered workers. The estimates show a positive relationship of duration with hours worked, but we find moderately negative results for participation in the labor market. The universally licensed occupations, however, exhibit heterogeneity in outcomes. Consequently, unlike some other labor market public policies, such as minimum wages or direct unemployment insurance benefits, occupational licensing would likely influence labor market outcomes when measured over a longer period of time.

Suggested Citation

  • Suyoun Han & Morris M. Kleiner, 2016. "Analyzing the Influence of Occupational Licensing Duration and Grandfathering on Labor Market Outcomes," NBER Working Papers 22810, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22810
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    References listed on IDEAS

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    Cited by:

    1. Peter Blair & Bobby Chung, 2017. "Occupational Licensing Reduces Racial and Gender Wage Gaps: Evidence from the Survey of Income and Program Participation," Working Papers 2017-50, Human Capital and Economic Opportunity Working Group.
    2. Sara Markowitz & E. Kathleen Adams & Mary Jane Lewitt, PhD, CNM & Anne Dunlop, MD, 2016. "Competitive Effects of Scope of Practice Restrictions: Public Health or Public Harm?," NBER Working Papers 22780, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J8 - Labor and Demographic Economics - - Labor Standards
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy
    • K0 - Law and Economics - - General
    • K2 - Law and Economics - - Regulation and Business Law
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • L88 - Industrial Organization - - Industry Studies: Services - - - Government Policy

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