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Creator: Kleiner, Morris and Soltas, Evan J. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 590 Abstract:
We assess the welfare consequences of occupational licensing for workers and consumers. We estimate a model of labor market equilibrium in which licensing restricts labor supply but also affects labor demand via worker quality and selection. On the margin of occupations licensed differently between U.S. states, we find that licensing raises wages and hours but reduces employment. We estimate an average welfare loss of 12 percent of occupational surplus. Workers and consumers respectively bear 70 and 30 percent of the incidence. Higher willingness to pay offsets 80 percent of higher prices for consumers, and higher wages compensate workers for 60 percent of the cost of mandated investment in occupation-specific human capital.
Parola chiave: Welfare analysis, Labor supply, Occupational licensing, and Human capital Soggetto: D61 - Allocative Efficiency; Cost-Benefit Analysis, J38 - Wages, Compensation, and Labor Costs: Public Policy, J44 - Professional Labor Markets; Occupational Licensing, J24 - Human Capital; Skills; Occupational Choice; Labor Productivity, and K31 - Labor Law