Occupational Licensing, Labor Mobility, and the Unfairness of Entry Standards

Mario Pagliero

No 13076, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The combination of occupational licensing at the local market level often coexists with labor mobility across local markets. We empirically study a labor market in which a district-specific entry (licensing) examination is coupled with labor mobility across districts. Our analysis exploits a change in the grading procedure of the exam, from grading in the local district to grading in a randomly assigned different district. We document that licensing regulation leads to extreme heterogeneity across markets in admission outcomes (up to 50 percent differences in licensing exam pass rates), unfair (discriminatory) admission procedures (up to 49 percent unfair exam results), and inefficient mobility of workers. These findings, together with the estimated impact of the reform on exam outcomes and grading standards, provide the first evidence of regulatory competition based on strategic interaction among licensing boards.

Keywords: Labor market regulation; Occupational regulation; Licensing; Legal market; Bar exam (search for similar items in EconPapers)
JEL-codes: J08 J44 L50 L84 (search for similar items in EconPapers)
Date: 2018-07
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (11)

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