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How Much of Barrier to Entry is Occupational Licensing?

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  • Peter Q. Blair
  • Bobby W. Chung

Abstract

We exploit state variation in licensing laws to study the effect of licensing on occupational choice using a boundary discontinuity design. We find that licensing reduces equilibrium labor supply by an average of 17%-27%. The negative labor supply effects of licensing appear to be strongest for white workers and comparatively weaker for black workers.

Suggested Citation

  • Peter Q. Blair & Bobby W. Chung, 2018. "How Much of Barrier to Entry is Occupational Licensing?," NBER Working Papers 25262, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25262
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    Citations

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    Cited by:

    1. Dodini, Samuel, 2023. "The spillover effects of labor regulations on the structure of earnings and employment: Evidence from occupational licensing," Journal of Public Economics, Elsevier, vol. 225(C).
    2. Alicia Plemmons, 2022. "Occupational licensing's effects on firm location and employment in the United States," British Journal of Industrial Relations, London School of Economics, vol. 60(4), pages 735-760, December.
    3. Chung, Bobby W., 2022. "The costs and potential benefits of occupational licensing: A case of real estate license reform," Labour Economics, Elsevier, vol. 76(C).
    4. Dustin Chambers & Colin O’Reilly, 2022. "The economic theory of regulation and inequality," Public Choice, Springer, vol. 193(1), pages 63-78, October.
    5. Massimiliano Tani, 2021. "Occupational Licensing and the Skills Mismatch of Highly Educated Migrants," British Journal of Industrial Relations, London School of Economics, vol. 59(3), pages 730-756, September.
    6. Georgellis, Yannis & Clark, Andrew E. & Apergis, Emmanuel & Robinson, Catherine, 2022. "Occupational status and life satisfaction in the UK: The miserable middle?," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 509-527.
    7. Chambers, Dustin & O'Reilly, Colin, 2022. "Regulation and income inequality in the United States," European Journal of Political Economy, Elsevier, vol. 72(C).
    8. Noah J. Trudeau, 2021. "Occupational Licensing and Intra-MSA Effects: Massage Therapists in the US," Working Papers 21-03, Department of Economics, West Virginia University.
    9. Morris M. Kleiner & Edward J. Timmons, 2020. "Occupational Licensing: Improving Access to Regulatory Information," Journal of Labor Research, Springer, vol. 41(4), pages 333-337, December.
    10. Busso, Matias & Montaño, Sebastián & Muñoz-Morales, Juan, 2023. "Signaling Specific Skills and the Labor Market of College Graduates," Working papers 108, Red Investigadores de Economía.
    11. Bruhn, Jesse & Imberman, Scott & Winters, Marcus, 2022. "Regulatory arbitrage in teacher hiring and retention: Evidence from Massachusetts Charter Schools," Journal of Public Economics, Elsevier, vol. 215(C).
    12. Ilya Kukaev & Edward J. Timmons, 2023. "Certifiably employable?: The effects of occupational regulation on unemployment duration," Working Papers 23-02, Department of Economics, West Virginia University.
    13. Yelowitz, Aaron & Ingram, Samuel J., 2021. "How Does Occupational Licensing Affect Entry into the Medical Field? An Examination of EMTs," IZA Discussion Papers 14071, Institute of Labor Economics (IZA).
    14. Kihwan Bae & Edward Timmons, 2023. "Now You Can Take It with You: Effects of Occupational Credential Recognition on Labor Market Outcomes," Working Papers 23-03, Department of Economics, West Virginia University.
    15. Morris M. Kleiner & Evan J. Soltas, 2019. "A Welfare Analysis of Occupational Licensing in U.S. States," NBER Working Papers 26383, National Bureau of Economic Research, Inc.
    16. Xia, Xing, 2021. "Barrier to Entry or Signal of Quality? The Effects of Occupational Licensing on Minority Dental Assistants," Labour Economics, Elsevier, vol. 71(C).
    17. 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.
    18. Morris M. Kleiner & Evan J. Soltas, 2019. "A Welfare Analysis of Occupational Licensing in U.S. States," Staff Report 590, Federal Reserve Bank of Minneapolis.
    19. Brian Meehan & E. Frank Stephenson, 2020. "Reducing a Barrier to Entry: The 120/150 CPA Licensing Rule," Journal of Labor Research, Springer, vol. 41(4), pages 382-402, December.

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    More about this item

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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