A Model of Occupational Licensing and Statistical Discrimination

Peter Q. Blair and Bobby (Wing Yin) Chung

AEA Papers and Proceedings, 2021, vol. 111, 201-05

Abstract: We develop a model of statistical discrimination in occupational licensing with endogenous occupation selection and wage determination. We find a unique equilibrium with sharp comparative statics. Our key theoretical result is that the licensing premium is higher for workers who are members of demographic groups that face a higher cost of licensing. The predictions of the model can explain, for example, the empirical finding in the literature that occupational licenses that preclude felons close the racial wage gap among men by conferring a higher premium to Black men than to White men (Blair and Chung 2018).

JEL-codes: D63 J15 J24 J31 J44 J71 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Working Paper: A Model of Occupational Licensing and Statistical Discrimination (2020)
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DOI: 10.1257/pandp.20211112

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