The Effects of Occupational Licensing on Intraoccupational Racial Wage and Employment Gaps

• In Event: Occupational Licensing: Barriers, Competition, and Equity in the Modern Labor Market

Abstract

While the labor market effects of occupational licensing are well-studied, little is known about the disparate effects of licensing for Black and White workers. Existing literature suggests that licensing may provide a stronger signal for Black workers than White workers, closing racial wage and employment gaps (Blair and Chung 2019, 2025), while research on Progressive Era occupational regulation finds licensing did not have harmful effects on women and minorities (Law and Marks, 2012). However, there also exists research indicating  occpational licensing may exclude minority workers (Dorsey, 1983); and a human capital model which includes capital constraints suggests raising barriers to entry will reduce entry into an occupation for low-wealth groups. Utilizing a new historical dataset on occupational licensing regimes (Carollo, 2025), employment data from the Current Population Survey and American Community Survey, and exploiting time variation in licensure introduction, I use a staggered difference-in-difference approach to test the effects of occupational licensing on intraoccupational racial wage and employment gaps. I then analyze heterogeneity across occupations.

Author

• Ethan James Ellis, University of Minnesota
  Presenting Author