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Job Market Signaling through Occupational Licensing

Peter Blair () and Bobby Chung
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Bobby Chung: Clemson University

No 2017-50, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: A large literature demonstrates that occupational licensing is a labor market friction that distorts labor supply allocation and prices. We show that an occupational license serves as a job market signal, similar to education. In the presence of occupational licensing, we find evidence that firms rely less on observable characteristics such as race and gender in determining employee wages. As a result, licensed minorities and women experience smaller wage gaps than their unlicensed peers.

Keywords: wage inequality; statistical discrimination; occupational licensing; screening; signaling; optimal regulation (search for similar items in EconPapers)
JEL-codes: D21 D84 D82 D86 J24 J31 J41 J70 K23 K31 L51 (search for similar items in EconPapers)
Date: 2017-06
New Economics Papers: this item is included in nep-bec, nep-gen, nep-hme, nep-hrm, nep-law and nep-lma
Note: MIP
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Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://humcap.uchicago.edu/RePEc/hka/wpaper/Blair_ ... racial_wage_gaps.pdf First version, May 15, 2017 (application/pdf)
http://humcap.uchicago.edu/RePEc/hka/wpaper/Blair_ ... ial_wage_gaps_r1.pdf Second version, October 17, 2017 (application/pdf)
http://humcap.uchicago.edu/RePEc/hka/wpaper/Blair_ ... ial_wage_gaps_r2.pdf Third version, June 27, 2018 (application/pdf)

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