Working papers
The Origins and Evolution of Occupational Licensing in the United States (with Jason Hicks, Andrew Karch, and Morris Kleiner)
The analysis of occupational licensing has largely concentrated on its influence in the labor market and on consumer welfare. By contrast, relatively little is known about how occupational licensing laws originated or the key factors in their evolution. In this paper, we study the determinants of state-level licensing requirements from 1870 to 2020. We begin by developing a model where licensing arises as an endogenous political outcome and use this framework to study how market characteristics and political incentives impact the likelihood of regulation. Our empirical analysis draws on a novel database tracking the initial enactment of licensing legislation for hundreds of unique occupations, as well as changes to the specific qualifications required to attain a license over time. Consistent with the predictions of our model, we find first that licensing is more prevalent and was adopted earlier for occupations that plausibly pose a greater risk of harm to consumers. Second, within occupations, regulation tends to diffuse from larger to smaller markets over time. Finally, the political organization of an occupation, as measured by the establishment of a state professional association, significantly increases the probability of a licensing statute being enacted.
The Impact of Occupational Licensing on Earnings and Employment: Evidence from State-Level Policy Changes (Job Market Paper)
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This paper studies the short- and long-run impact of occupational licensing on labor market outcomes in the United States. I compile new data from contemporary and historical legislative documentation that records all state-level policy changes for over 200 licensed occupations. Using this data, I implement an event study design that exploits within-occupation variation in the timing of licensing statutes across states to trace out the dynamic response of earnings and employment to policy changes. I find consistent evidence across several independent employer and household surveys that the typical licensing statute adopted during the past half-century increased worker earnings, but had null or weakly positive effects on employment. Twenty-five years after licensing statutes were adopted, cumulative wage growth in treated state-occupation cells exceeded that of untreated controls by 4 to 7%. Over the same time period, my results rule out an average disemployment effect greater than -5%. The data show much larger decreases in employment, however, among occupations that have little potential to cause serious harm. In cases where the consumer protection rationale for licensing is more plausible, I find simultaneous increases in both earnings and employment following the adoption of licensing requirements.
Historical Data on Occupational Regulation in the United States
Download paper (updated March 2024); Data repository (partial sample)
This paper describes the construction and validation of a novel dataset that compiles over one hundred and fifty years of occupational licensing, certification, and registration requirements in all fifty states and the District of Columbia. It identifies the enactment and effective dates of state and federal policy changes for more than 300 distinct occupations that cover the vast majority of regulated jobs in the United States. Relative to existing data on occupational licensing and regulation, my dataset is more comprehensive, reduces measurement error in enactment dates, and offers an internally-consistent taxonomy of regulatory methods. Linking my policy data to independent measures of occupational licensing and certification from recent household survey data and the text of online job postings, I show that state-level policy differences have an economically significant effect on the credentials workers hold and employers require. I discuss the interpretation of estimates based on these measures and conclude with recommendations and directions for future research.
The Causal Effect of Place: Evidence from Japanese-American Internment (with Daniel Shoag)
Recent research has stressed the importance of long-run place effects on income and economic mobility, but the literature has struggled to isolate the causal impact of location. This paper provides new evidence on these effects using administrative data on over 100,000 Japanese-Americans who were interned during World War II. Internees were conditionally randomly assigned to camps in seven different states and held for several years. Restitution payments paid in the early 1990s to the universe of surviving internees allow us to measure their locations and outcomes nearly half a century after the camp assignments. Using this unique natural experiment we find, first, that camp assignment had a lasting impact on individuals’ long-term locations after they were released. Next, using this variation, we find large place effects on individual economic outcomes like income, education, socioeconomic status, house prices, and housing quality. Though internment was a negative shock overall, relative to other internees, people assigned to wealthier regions do better on all measures. Random location assignment affected intergenerational economic outcomes as well, with families assigned to more socially mobile areas (as designated by Chetty et al., 2014) displaying lower cross-generational correlation in outcomes. Finally, we provide evidence that assignment to richer states impacted people’s values and political views, a new and intriguing mechanism through which place effects operate. Together, this new causal evidence on location effects has broad implications for urban economics.
