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Is Occupational Licensing a Barrier to Interstate Migration?

Janna Johnson and Morris M. Kleiner
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Janna Johnson: University of Minnesota
Morris M. Kleiner: Federal Reserve Bank of Minneapolis

No 561, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: Occupational licensure, one of the most significant labor market regulations in the United States, may restrict the interstate movement of workers. We analyze the interstate migration of 22 licensed occupations. Using an empirical strategy that controls for unobservable characteristics that drive long-distance moves, we find that the between-state migration rate for individuals in occupations with state-specific licensing exam requirements is 36 percent lower relative to members of other occupations. Members of licensed occupations with national licensing exams show no evidence of limited interstate migration. The size of this effect varies across occupations and appears to be tied to the state specificity of licensing requirements. We also provide evidence that the adoption of reciprocity agreements, which lower re-licensure costs, increases the interstate migration rate of lawyers. Based on our results, we estimate that the rise in occupational licensing can explain part of the documented decline in interstate migration and job transitions in the United States.

Keywords: Occupational licensing; Labor market regulation; Interstate migration (search for similar items in EconPapers)
JEL-codes: J01 J1 J44 K0 L38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab, nep-mig and nep-ure
Date: 2017-12-06
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:561

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DOI: 10.21034/sr.561

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