Does occupational licensing impact incomes? - The German crafts case

Kaja Fredriksen

No 11 (2018), ifh Working Papers from Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh)

Abstract: The empirical literature on occupational licensing finds standard monopoly effects of entry regulations: Less competition and economic rents for professionals. I exploit the natural experimental design of a change in the German crafts regulation in 2004, which removed the traditional licensing requirement only for certain trades, and find no robust effects. I point out that existing studies on the income effects of occupational licensing suffer from methodological weaknesses. Most studies rely on cross-section estimates that are likely to be biased due to unobserved heterogeneity whereas others do not rigorously define the population of interest. Based on my results, I suggest that demand-effects and market saturation have so far been inadequately discussed in the literature.

Keywords: Labor markets; occupational licensing; monopoly rent; natural experiment; craftsmanship (search for similar items in EconPapers)
JEL-codes: I28 I39 J24 L51 (search for similar items in EconPapers)
Date: 2018, Revised 2018
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifhwps:112018

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