The Prevalence and Effects of Occupational Licensing

12 Pages Posted: 20 Oct 2010

See all articles by Morris M. Kleiner

Morris M. Kleiner

University of Minnesota - Twin Cities - Hubert H. Humphrey Institute of Public Affairs; National Bureau of Economic Research (NBER)

Alan B. Krueger

Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

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Abstract

Our study provides the first national analysis of the labour market implications of workers who are licensed by any agency of the government in the USA. Using a specially designed Gallup survey of a nationally representative sample of Americans, we provide an analysis of the influence of this form of occupational regulation. We find that 29 per cent of the workforce is required to hold a licence, which is a higher percentage than that found in other studies that rely on state-level occupational licensing data or single states. Workers who have higher levels of education are more likely to work in jobs that require a licence. Union workers and government employees are more likely to have a licence requirement than are non-union 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 per cent — and that being both licensed and in a union can increase wages by more than 24 per cent. However, unlike unions which reduce variance in wages, licensing does not significantly reduce wage dispersion for individuals in licensed jobs.

Suggested Citation

Kleiner, Morris M. and Krueger, Alan B., The Prevalence and Effects of Occupational Licensing. British Journal of Industrial Relations, Vol. 48, Issue 4, pp. 676-687, December 2010. Available at SSRN: https://ssrn.com/abstract=1694824 or http://dx.doi.org/10.1111/j.1467-8543.2010.00807.x

Morris M. Kleiner (Contact Author)

University of Minnesota - Twin Cities - Hubert H. Humphrey Institute of Public Affairs ( email )

and the Industrial Relations Center
Minneapolis, MN 55455
United States
612-625-2089 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alan B. Krueger

Princeton University - Industrial Relations Section ( email )

Princeton, NJ 08544-2098
United States
609-258-4046 (Phone)
609-258-2907 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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