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Title: The Origins and Evolution of Occupational Licensing in the
Citation Type: Miscellaneous
Publication Year: 2022
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Abstract: The analysis of occupational licensing has largely concentrated on its influence in the labor market and on consumer welfare. By contrast, relatively little is known about how occupational licensing laws originated or the key factors in their evolution. In this paper, we study the determinants of state-level licensing requirements from 1870 to 2020. We begin by developing a model where licensing arises as an endogenous political outcome and use this framework to study how market characteristics and political incentives impact the likelihood of regulation. Our empirical analysis draws on a novel database tracking the initial enactment of licensing legislation for hundreds of unique occupations, as well as changes to the specific qualifications required to attain a license over time. Consistent with the predictions of our model, we find first that licensing is more prevalent and was adopted earlier for occupations that plausibly pose a greater risk of harm to consumers. Second, within occupations, regulation tends to diffuse from larger to smaller markets over time. Finally, the political organization of an occupation, as measured by the establishment of a state professional association, significantly increases the probability of a licensing statute being enacted.
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Authors: Carollo, Nicholas A; Hicks, Jason F; Karch, Andrew; Kleiner, Morris M
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Data Collections: IPUMS USA - Ancestry Full Count Data, IPUMS NHGIS
Topics: Labor Force and Occupational Structure
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