Morris Kleiner (University of Minnesota)

“Analyzing the Influence of Occupational Licensing Duration on Labor Market Outcomes”

ABSTRACT

We analyze the labor market influence of the duration of occupational licensing statutes for eleven major universally licensed occupations in the U.S. Time from the start of state occupational licensing (i.e. licensing duration) may matter in influencing labor market outcomes. States usually enact grandfather clauses and ratchet up requirements that protect existing workers, and increase costs to new entrants. In addition, adding to or raising the entry barriers are likely easier once an occupation is established in a political jurisdiction.  We find that duration years of occupational licensure are positively associated with wages and hours worked, but negatively related to participation in the labor market. Consequently, unlike other labor market public policies, occupational licensing would likely influence labor market outcomes the longer it is in place.