Full Citation
Title: The Impact of Occupational Licensing on Earnings and Employment: Evidence from State-Level Policy Changes
Citation Type: Miscellaneous
Publication Year: 2020
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Abstract: This paper studies the short-and long-run impact of occupational licensing on labor market outcomes in the United States. I compile new data from contemporary and historical legislative documentation that records all state-level policy changes for over 200 licensed occupations. Using this data, I implement an event study design that exploits within-occupation variation in the timing of licensing statutes across states to trace out the dynamic response of earnings and employment to policy changes. I find consistent evidence across several independent employer and household surveys that the typical licensing statute adopted during the past half-century increased worker earnings, but had null or weakly positive effects on employment. Twenty-five years after licensing statutes were adopted, cumulative wage growth in treated state-occupation cells exceeded that of untreated controls by 4 to 7%. Over the same time period, my results rule out an average disemployment effect greater than-5%. The data show much larger decreases in employment, however, among occupations that have little potential to cause serious harm. In cases where the consumer protection rationale for licensing is more plausible, I find simultaneous increases in both earnings and employment following the adoption of licensing requirements.
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Authors: Carollo, Nicholas A
Publisher: University of California, Los Angeles
Data Collections: IPUMS USA, IPUMS CPS
Topics: Labor Force and Occupational Structure
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