Occupational Licensing and Economic Rents

Occupational Licensing and Economic Rents

[T]here is evidence that some licensing requirements create economic rents for licensed practitioners at the expense of excluded workers and consumers—increasing inefficiency and potentially also increasing inequality. First, the employment barriers created by licensing raise wages for those who are successful in gaining entry to a licensed occupation by restricting employment in the licensed profession and lowering wages for excluded workers. For example, researchers found that 100 additional hours of required training decreased the number of Vietnamese manicurists by almost 18 percent in a State. Estimates find that unlicensed workers earn 10 to 15 percent lower wages than licensed workers with similar levels of education, training, and experience.

Jason Furman

The White House

November 2015

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By |2018-01-01T00:00:00-08:00January 1st, 2018|Inequality, Occupational Licensing, Reference|