Occupational Licensing in the European Union: Coverage and Wage Effects

47 Pages Posted: 16 Jan 2018

See all articles by Maria Koumenta

Maria Koumenta

Queen Mary University of London

Mario Pagliero

University of Turin - Department of Economics; University of Turin - Collegio Carlo Alberto

Date Written: January 2018

Abstract

We present the first EU-wide study on the prevalence and labour market impact of occupational regulation in the EU. Drawing on a new EU Survey of Regulated Occupations, we find that licensing affects about 22 percent of workers in the EU, although there is significant variability across member states and occupations. On average, licensing is associated with a 4 percent higher hourly wages. Using decomposition techniques we show that rent capture accounts for one third of this effect and the remaining is attributed to signalling. We find considerable heterogeneity in the wage gains by occupation and level of educational attainment. Finally, occupational licensing increases wage inequality. After accounting for composition effects, licensing increases the standard deviation of wages by about 0.02 log points.

Keywords: licensing, occupational regulation

JEL Classification: J31, J44

Suggested Citation

Koumenta, Maria and Pagliero, Mario, Occupational Licensing in the European Union: Coverage and Wage Effects (January 2018). CEPR Discussion Paper No. DP12577. Available at SSRN: https://ssrn.com/abstract=3102191

Maria Koumenta (Contact Author)

Queen Mary University of London ( email )

Mile End Rd
Mile End Road
London, London E1 4NS
United Kingdom

Mario Pagliero

University of Turin - Department of Economics ( email )

Corso Unione Sovietica 218b
10134 Torino
Italy

University of Turin - Collegio Carlo Alberto ( email )

via Real Collegio 30
Moncalieri, Torino 10024
Italy

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