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The Prevalence and Effects of Occupational Licensing

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  • Morris M. Kleiner
  • Alan B. Krueger

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

  • Morris M. Kleiner & Alan B. Krueger, 2008. "The Prevalence and Effects of Occupational Licensing," NBER Working Papers 14308, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:14308
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. 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.
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    5. Anonymous, 1952. "Occupational Licensing Legislation in the States. (Chicago: The Council of State Governments. 1952. Pp. 112. $3.00.)," American Political Science Review, Cambridge University Press, vol. 46(4), pages 1197-1197, December.
    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.
    7. Carl Shapiro, 1986. "Investment, Moral Hazard, and Occupational Licensing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(5), pages 843-862.
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    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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