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Occupational Licensing and Labor Market Policies

Paper Session

Friday, Jan. 3, 2025 2:30 PM - 4:30 PM (PST)

Parc 55, Mission 2 & 3
Hosted By: Labor and Employment Relations Association
  • Chair: Tingting Zhang, University of Illinois-Urbana-Champaign

Does Universal Licensing Recognition Improve Patient Access? Evidence from Healthcare Utilization

Morris Kleiner
,
University of Minnesota
Yun Taek Oh
,
University of Nevada-Reno

Abstract

Optimizing physician labor supply has been an important policy issue in healthcare in the United States. One of the proposed solutions has been the Interstate Medical Licensure Compact which provides universal licensing recognition (ULR) and waives the re-licensure processes of out-of-state licensed workers. The policy. allows physicians to move across state lines without relicensing and the practice was adopted to raise the local labor supply of physicians relative to the demand for their services. While economic theory suggests that the relaxation of regulations further increases the local labor supply and subsequently improves consumer benefits, there has been no empirical evidence. In this study, we use the Behavioral Risk Factor Surveillance System to investigate the effect of universal reciprocity of physician licenses on healthcare utilization. Our results show that the universal reciprocity of physician licenses significantly raises the proportion of respondents accessing healthcare, particularly among older respondents, and reduces the proportion of respondents not getting healthcare services due to costs. We also show that the positive effect of the ULR on healthcare utilization is closely related to the inflow of doctors but not with interstate migration. We also validate that the estimated effects are from the ‘universal reciprocity’ of physician licenses, instead of unknown factors related to the ULR. The use of universal licensing recognition may allow for a more efficient regional distribution of physicians and result in greater access to health care.

Teacher Testing Standards and the New Teacher Pipeline

Mindy Marks
,
Northeastern University
Marc Law
,
University of Vermont
Tomer Stern
,
Northeastern University

Abstract

This study examines the impact of changes in teacher testing standards on the pipeline of new teachers. We take advantage of a quasi-experimental change in the minimum passing score required for admission into teacher training programs that occurred when the Education Testing Service replaced the Pre-Professional Standards Test (PPST) with the Praxis Core. Under the PPST individual states set their own passing scores which varied widely across states. When the Praxis Core was adopted these states set common passing scores. Using institution-level data, we find that higher testing standards are associated with a sharp reduction in enrollments in teacher training programs and that the effects are concentrated in academically weaker institutions. We further document that higher entry standards reduce graduations from teacher training programs, suggesting that the increase in standards did not merely screen out students who would not have met the graduation requirements. The overall increase in standards arising from the replacement of the PPST with the Praxis Core accounts for half of the recent decline in graduations from teacher preparation programs.

The Impact of Occupational Licensing on For-Profit Programs

Kihwan Bae
,
West Virginia University
Edward Timmons
,
West Virginia University

Abstract

Occupational licensing often requires vocational education at for-profit colleges in the United States. However, little is known about the impact of occupational licensing on for-profit education programs. Using state licensing reforms on the minimum education requirement for cosmetology, we study how occupational licensing affects predominantly for-profit cosmetology programs. We first document a surprisingly strong tie between the minimum licensing requirement and the length of cosmetology program. After the policy reform, the program length on average declined by about 25%. At the same time, the cost of attendance reduced by about 7%, and the average Pell grant declined by about 3%. However, the number of students newly enrolled into cosmetology programs little changed after the policy, suggesting that the supply of cosmetologists is inelastic to the change in the minimum training requirement (and subsequent declines in tuition and time for program completion). Lastly, we find no evidence on the entry of less trained cosmetologists negatively affecting incumbent cosmetologist wages. These findings suggest this type of reform is effective to reduce costs for licensing for prospective workers, save federal financial aids to for-profit schools, without harming incumbent practitioners.

Does Occupational Licensing Reduce Job Loss During Recessions?

Peter Blair
,
Harvard University
Bobby Chung
,
University of South Florida

Abstract

In theory, licensed workers could be shielded from unemployment during recession since occupational licensing laws are asymmetric -- making unlicensed workers an illegal substitute for licensed workers but not the reverse. We test our hypothesis using a difference-in-differences event study research design that exploits cross-state variation in licensing laws to compare the unemployment rate between licensed and unlicensed workers before and after the Great Recession and the COVID-19 recession. Controlling for worker ability, we find that licensing shields workers from a recession-induced increase in the unemployment rate of 1.1 p.p. during the Great Recession and 0.82 p.p. during COVID-19.

Discussant(s)
Davud Rostam-Afschar
,
University of Mannheim
Vitor Melo
,
West Virginia University
Wenchen Wang
,
Illinois Institute of Technology
Ethan Ellis
,
University of Minnesota-Twin Cities
JEL Classifications
  • J4 - Particular Labor Markets