Analyzing the Influence of Occupational Licensing Duration and Grandfathering on Wage Determination

Suyoun Han, Morris M. Kleiner

Research output: Contribution to journalArticlepeer-review

Abstract

The length of time from the implementation of an occupational licensing statute (i.e., licensing duration) may matter in influencing labor-market outcomes as entry requirements evolve. In addition, states enact grandfather clauses that allow existing workers to continue employment following these regulations, while ratcheting up requirements to increase entry costs for new entrants. We analyze the labor-market influence of the duration of occupational licensing statutes for fifteen state universally licensed occupations over a 75-year period. We find a positive nonlinear wage effect for licensing duration. Further, we find that occupational licensing raises the wages of grandfathered workers by almost 5 percent. The licensed occupations, however, exhibit heterogeneity in outcomes. Duration of occupational licensing influences wage determination when measured over longer time periods.

Original languageEnglish (US)
Pages (from-to)147-187
Number of pages41
JournalIndustrial Relations
Volume60
Issue number2
DOIs
StatePublished - Apr 2021

Bibliographical note

Funding Information:
The authors' affiliations are, respectively, University of Minnesota, Minneapolis, Minnesota. E‐mail: ; Federal Reserve Bank of Minneapolis, Minneapolis, Minnesota and National Bureau of Economic Research, Cambridge, Massachusetts. E‐mail: . The authors greatly appreciate suggestions from Joan Gieseke, Mindy Marks, and Elizabeth Powers. They would especially like to thank Hwikwon Ham for his detailed comments as well as the reviewers and editor at for their suggestions. The authors would also like to thank participants in seminars at the American Economic Association annual meetings; Clemson University; Collegio Carlo Alberto; Kansas State University; Labor and Employment Relations Association annual meetings; London School of Economics; Society of Labor Economists annual meetings; University of Illinois, Urbana‐Champaign; University of Minnesota–Twin Cities; and the W.E. Upjohn Institute for Employment Research for their comments. The authors appreciate the financial support of the Smith Richardson Foundation and the Kauffman Foundations. The views expressed here are those of the authors and do not necessarily reflect the views or policies of the Smith Richardson Foundation, the Kauffman Foundation, or the Federal Reserve Bank of Minneapolis. * hanxx598@umn.edu klein002@umn.edu Industrial Relations

Funding Information:
*The authors' affiliations are, respectively, University of Minnesota, Minneapolis, Minnesota. E-mail: hanxx598@umn.edu; University of Minnesota, Minneapolis, Minnesota, Federal Reserve Bank of Minneapolis, and National Bureau of Economic Research, Cambridge, Massachusetts. E-mail: klein002@umn.edu. The authors greatly appreciate suggestions from Joan Gieseke, Mindy Marks, and Elizabeth Powers. They would especially like to thank Hwikwon Ham for his detailed comments as well as the reviewers and editor at Industrial Relations for their suggestions. The authors would also like to thank participants in seminars at the American Economic Association annual meetings; Clemson University; Collegio Carlo Alberto; Kansas State University; Labor and Employment Relations Association annual meetings; London School of Economics; Society of Labor Economists annual meetings; University of Illinois, Urbana-Champaign; University of Minnesota?Twin Cities; and the W.E. Upjohn Institute for Employment Research for their comments. The authors appreciate the financial support of the Smith Richardson Foundation and the Kauffman Foundations. The views expressed here are those of the authors and do not necessarily reflect the views or policies of the Smith Richardson Foundation, the Kauffman Foundation, or the Federal Reserve Bank of Minneapolis.

Publisher Copyright:
© 2021 Regents of the University of California

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