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Licensure as a Credential: Evidence on Unemployment Protection and Inequality from the Great Recession and COVID-19

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Listed:
  • Peter Q. Blair
  • Bobby W. Chung

Abstract

Recent research shows that education shields workers from job loss in recessions. We test whether occupational licensing, another widespread credential, provides similar unemployment protection during recessions. Using individual-level licensing data and supplemental state-occupation measures, we study both the Great Recession and the COVID-19 recession. Licensed workers experienced a 0.8-1 percentage point (27%) smaller increase in unemployment than comparable unlicensed workers in both downturns. Ignoring these unemployment effects understates inequality between licensed and unlicensed workers by 3–7%. Our findings suggest that, like education, licensing not only raises wages but also protects jobs, thereby amplifying inequality during economic downturns.

Suggested Citation

  • Peter Q. Blair & Bobby W. Chung, 2024. "Licensure as a Credential: Evidence on Unemployment Protection and Inequality from the Great Recession and COVID-19," NBER Working Papers 32486, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32486
    Note: DAE ED IFM LE LS
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    More about this item

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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