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The Evolution and Growth of Occupational Regulation and the Work Force

Paper Session

Sunday, Jan. 5, 2020 10:15 AM - 12:15 PM (PDT)

Manchester Grand Hyatt, Harbor F
Hosted By: Labor and Employment Relations Association
  • Chair: Morris M. Kleiner, University of Minnesota

The Origins and Evolution of Occupational Licensing in the United States

Jason Hicks
,
University of Minnesota
Andrew Karch
,
University of Minnesota
Morris M. Kleiner
,
University of Minnesota

Abstract

Although much research has examined the influence of occupational regulation on the workforce, little research has examined the conditions that lead to the passage of occupational licensing laws or changes in these laws. Our paper examines the determinants and evolution of occupational regulation among the U.S. states for more than 40 occupations that are licensed in all states. We initially model and estimate the political economy of the initial passage of these laws regulating occupations. Next, we examine and estimate how the laws evolved to include changes in initial entry, education and training, experience, and reciprocity. We examine and identify who the main actors developing the "web of rules" governing the status of occupational licensing as a major labor market institution.

Freedom of Movement, Taxation and Job Mobility in Europe

Davud Rostam-Afschar
,
University of Hohenheim
Kurt Schmidheiny
,
University of Basel

Abstract

This paper analyzes the effects of i) top personal income tax rates, ii) top corporate income tax rates, and iii) movement costs on international migration. We provide evidence based on income tax events for the 28 EU Member States, Norway and Iceland from 1995-2017. We compare effects of taxation to those of migration costs identified through events in interstate occupational licensing. While descriptive evidence suggests that higher taxes in the origin state increase migration, we estimate the long-run tax elasticity of mobility to be precisely zero for personal income taxes and precisely zero for corporate income taxes. In contrast, adoption of freedom of movement for workers increases the migration probability by more than 50% the long run. We show that tax incentives matter in interaction with lower migration costs but not on their own. This suggests that regulation of professions is much more important than taxation when individuals decide where to locate and that the massive tax incentives in Eastern European states could not slow down the talent drain.

Occupational Licensing and Female Labour Market Outcomes

Maria Koumenta
,
Queen Mary University of London
Mario Pagliero
,
University of Torino
Davud Rostam-Afschar
,
University of Hohenheim

Abstract

Occupational licensing at the local market level often coexists with labor mobility across local markets. We empirically study a labor market in which a district-specific entry (licensing) examination is coupled with labor mobility across districts. Our analysis exploits a change in the grading procedure of the exam, from grading in the local district to grading in a randomly assigned different district. We document that licensing regulation leads to extreme heterogeneity across markets in admission outcomes (up to 50 percent differences in licensing exam pass rates), unfair (discriminatory) admission procedures (up to 49 percent unfair exam results), and inefficient mobility of workers. We then present a model of occupational licensing and labor mobility and test its additional predictions. Our findings provide the first evidence of regulatory competition based on strategic interaction among licensing boards.

Occupational Regulation in Russia

Ilya Kukaev
,
Saint Francis University
Robert J. Thornton
,
Lehigh University
Edward J. Timmons
,
Saint Francis University
Pavel Baryshnikov
,
Saratov State Law Academy

Abstract

Recent studies of occupational regulation and its effects have focused on a growing number of countries, generally market economies such as the U.S and several European countries. However, with the exception of China and Poland, no studies have been done for transition economies. Russia is one such economy, and it has a rather unique system of occupational regulation, which has been undergoing dramatic changes in recent years. In this paper, we provide an overview of the Russian occupational regulatory system, focusing upon the various forms of licensing and certification. We also describe what in Russia are known as self-regulatory organizations or SROs, an unusual type of occupational regulation equivalent in some cases to de facto licensing.
Discussant(s)
Edward J. Timmons
,
Saint Francis University
Ryan Nunn
,
Brookings Institution
Maury Gittleman
,
U.S. Bureau of Labor Statistics
Victoria M. Udalova
,
U.S. Census Bureau
JEL Classifications
  • J4 - Particular Labor Markets