Creator: Phelan, Christopher Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 676 Abstract:
No abstract available. Introduction: This paper considers the question, Does the limited liability associated with banking make it necessary for a government to regulate bank employee compensation? It attempts to shed light on this question by considering a mechanism design framework. In it, a single risk averse employee must be induced to search for good investment opportunities and turn down bad investment opportunities.
Subject (JEL): J38 - Wages, Compensation, and Labor Costs: Public Policy
Creator: Han, Suyoun and Kleiner, Morris Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 556 Abstract:
The length of time from the implementation of an occupational licensing statute (i.e., licensing duration) may matter in influencing labor market outcomes. Adding to or raising the entry barriers are likely easier once an occupation is established and has gained influence in a political jurisdiction. States often enact grandfather clauses and ratchet up requirements that protect existing workers and increase entry costs to new entrants. We analyze the labor market influence of the duration of occupational licensing statutes for 13 major universally licensed occupations over a 75-year period. These occupations comprise the vast majority of workers in these regulated occupations in the United States. We provide among the first estimates of potential economic rents to grandfathering. We find that duration years of occupational licensure are positively associated with wages for continuing and grandfathered workers. The estimates show a positive relationship of duration with hours worked, but we find moderately negative results for participation in the labor market. The universally licensed occupations, however, exhibit heterogeneity in outcomes. Consequently, unlike some other labor market public policies, such as minimum wages or direct unemployment insurance benefits, occupational licensing would likely influence labor market outcomes when measured over a longer period of time.
Keyword: Duration and grandfathering effects on wage determination, Labor market regulation, Hours worked, Occupational licensing, and Workforce participation Subject (JEL): L88 - Industry Studies: Services: Government Policy, J80 - Labor Standards: General, L38 - Public Policy, J38 - Wages, Compensation, and Labor Costs: Public Policy, J30 - Wages, Compensation, and Labor Costs: General, L51 - Economics of Regulation, K00 - Law and Economics: General, J08 - Labor Economics Policies, J44 - Professional Labor Markets; Occupational Licensing, K20 - Regulation and Business Law: General, L12 - Monopoly; Monopolization Strategies, J88 - Labor Standards: Public Policy, and L84 - Personal, Professional, and Business Services
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.
Keyword: Labor supply, Welfare analysis, Human capital, and Occupational licensing Subject (JEL): J24 - Human Capital; Skills; Occupational Choice; Labor Productivity, D61 - Allocative Efficiency; Cost-Benefit Analysis, K31 - Labor Law, J44 - Professional Labor Markets; Occupational Licensing, and J38 - Wages, Compensation, and Labor Costs: Public Policy