The Ties that Bind: Occupational Licensing and Family Migration

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

Abstract

We examine how the limited portability of occupational licenses across states affects interstate migrants’ labor market outcomes. To address selection into migration, we focus on female workers with family ties whose migration is likely to be driven by their male spouse's career. As a validation of this assumption, we show that interstate migration is uncorrelated with their licensing status among female spouses with a male spouse. To identify the effect of limited license portability across states, we compare labor market outcomes between interstate and intrastate migrants with a low portability license due to state-specific licensing exams, relative to those with a high portability license with the help of national-standard licensing exams. To implement the analysis, we use individual-level data from the Current Population Survey (CPS) Annual Socio-Economic Supplements (ASEC) 2003-2023.
We find a negative employment effect of limited license portability across states. Among female workers with family ties, the employment rate is 10.2 percentage points lower among interstate migrants in state-specific licensed occupations than it is among intrastate intercounty migrants in the same occupations, relative to the same difference among migrants in quasi-national licensed occupations. Moreover, we find a negative effect of limited license portability on migrants continuing a career in the same occupation. Conditional on workers being employed, those who worked in state-specific licensed occupations are 11.5 percentage points more likely to change their occupation after interstate migration than those who worked in quasi-national licensed occupations, relative to the same difference among intrastate intercounty migrants. Taken together, about 20% of female interstate migrants with family ties in state-specific licensed occupations neither have a job nor continue an occupation on average six months after migration. This large interruption to the career of female spouses, caused jointly by family migration and occupational licensing, may cause a loss of occupation-specific human capital and a downward shift of their earnings trajectory. Also, the male dominance in family migration and the prevalence of female-dominated licensed occupations may reinforce and further widen the spousal earnings gap, which has a negative implication on the overall gender earnings gap. Moreover, since migrants with out-of-state licenses are experienced practitioners with transferrable skills across U.S. states, occupational licensing barriers across states may reduce public welfare.

Author

• Kihwan Bae, West Virginia University
  Presenting Author