The spillover effects of labor regulations on the structure of earnings and employment: Evidence from occupational licensing

Samuel Dodini

Journal of Public Economics, 2023, vol. 225, issue C

Abstract: This paper measures how labor regulations affect the structure of earnings and employment in other occupations in the context of occupational licensing. Using a state boundary discontinuity design, I estimate the market spillovers of licensing on other occupations with similar skills, which I classify using hierarchical clustering techniques on skills data from O*NET. I find evidence of negative earnings and employment spillovers, with the largest earnings effects concentrated among women, black, and foreign-born Hispanic workers. These effects lead to greater earnings inequality. The results are most consistent with licensing changing skill- and industry-specific labor demand and with a monopsony model where licensing increases search costs and reduces workers’ outside options.

Keywords: Occupational licensing; Labor demand; Spillovers; Monopsony; Labor regulations; Inequality (search for similar items in EconPapers)
JEL-codes: D63 J21 J24 J31 J42 J62 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:225:y:2023:i:c:s0047272723001299

DOI: 10.1016/j.jpubeco.2023.104947

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