Kraus Thesis

Abstract

The proliferation of occupational licensing in the U.S. in the past few decades has received in- creased attention from researchers. Most academic research focuses on the effects of licensing policies on wages and employment among licensed workers. This paper seeks to identify and quantify the supply-side costs faced by those excluded workers by examining how licensing changes the demographic characteristics of workers within an occupation and moreover, how specific licensing requirements can shift this distribution. I find that licensure of low-income occupations represents an effective barrier to entry for two of the most marginalized groups of American workers—immigrants and high school dropouts. Across a variety of specifica- tions, and robust to the inclusion of many controls, immigrants and high school dropouts are persistently less likely to be employed in licensed occupations. An understanding of who is disproportionately affected by such regulations is necessary for an informed debate about the merits of such requirements and in order to construct a regulatory environment that is more inclusive.