Is Occupational Licensing a Barrier to Interstate Migration?

Occupational licensing has become one of the most significant forms of labor market regulation in the United States. About 25 percent of the workforce requires a license to work; in 1950, that figure was only 5 percent (U.S. Department of Labor, Bureau of Labor Statistics 2016; Kleiner and Krueger 2010, 2013). Proponents of occupational licensing contend that it protects consumers, ensuring high service quality and protecting the public from harm by making sure that all service providers have attained a minimum qualification level. By requiring such qualifications, however, occupational licensing may also restrict entry and limit the mobility of individuals in these occupations. The jurisdiction-specific nature of licensing also may limit the ability of workers to move to take advantage of job opportunities, and may limit the wage growth and employment of members of licensed occupations by restricting their geographic mobility. We provide new and more comprehensive detailed evidence of the influence of occupational licensing on reducing the interstate migration of licensed workers. These results suggest that reducing some of these restrictions has the potential to enhance labor market fluidity, increase the efficiency of the labor market, and raise the earnings of regulated workers.

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