Occupational License Portability and the Misallocation of Labor

Mark Colas

No 12992, CESifo Working Paper Series from CESifo

Abstract: Occupational licenses are typically jurisdiction-specific: workers who cross borders must relicense before resuming work. I quantify the resulting misallocation in the United States. I estimate a dynamic equilibrium model of occupation and location choice with occupational licensing and interstate relicensing costs. Non-portability reduces migration among workers in non-portable occupations, reduces employment among those who move, and deters entry into these occupations altogether because workers anticipate future relicensing costs. As a result, non-portability reduces aggregate earnings by roughly $18 billion annually. Workers in these occupations benefit, however, as non-portability raises their earnings.

Keywords: occupational licensing; spatial equilibrium; labor market dynamics (search for similar items in EconPapers)
JEL-codes: J24 J44 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-lma
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