RESEARCH
Abstract
Although the monopoly effects of occupational licensing are generally understood
for the broader labor market, industry-specific estimates of the costs and benefits
from licensing have presented significant logistical challenges in the literature.
We first present a theoretical model of firm behavior under licensure and develop
two new occupation crosswalks between licensing data, NAICS codes, and ratings
data to provide the first firm-level study estimating both the costs and benefits
for 38 occupations. We then employ linear regression to estimate the effects of
licensing on establishment behavior, employment, and quality as measured by consumer
ratings, using a sample of 15 million U.S. establishments. Licensing is associated
with fewer per capita establishments within a county, although licensing shifts
some labor from employment to contract work. We identify differential effects from
licensing by type of industry and employment and find less self-employment and
a higher average number of employees in licensed industries. Finally, licensing
requirements are not generally associated with higher quality, as measured by consumer
ratings, and in some cases are associated with lower quality.
Abstract
States commonly rely on occupational licensing laws to protect consumers; however, these laws can have substantial costs. As the recognition of the costs of licensing has grown, many states have been implementing reforms. The most common reform is the universal recognition of out-of-state licenses, which makes it easier to transfer a license from another state. Using spatial econometrics techniques, I examine factors related to a state’s choice to adopt universal recognition, testing whether adoption can be explained by proximity or characteristics within a state. Relying on a spatial autoregressive model, I find evidence that universal recognition adoption can be explained by the tightness of the labor market, economic conservatism, and fewer licensing barriers, suggesting that adoption of the reform is largely driven by characteristics of each state. While the diffusion of policy is usually influenced by the adoption of neighbors, for universal recognition, this does not appear to be the case.
Abstract
Occupational licenses are not easily portable across states or national borders,
creating labor market frictions for migrant workers. This study examines whether
expedited licensing programs reduce these frictions for military spouses, a group
of tied migrants who frequently relocate across states. I find that following the
programs, the employment rate significantly increased among military spouses who
recently moved across states. Consequently, military spouses in licensed occupations
earned more from work and received less unemployment compensation in the year of
migration. These findings highlight expedited licensure as an effective policy
tool for reducing occupational licensing barriers associated with interstate migration.
TESTIMONY
educational ONE-PAGERS
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