The issue of occupational regulation has been of academic interest from Adam Smith to Milton Friedman (Friedman 1962; Smith 1937). In Western democracies, the number of workers who are required to have a licence in order to work has grown substantially. For example, in the United States,occupational licensing has grown from approximately 4 per cent of the workforce in the early 1950s to about 29 per cent in 2006 (Kleiner andKrueger 2010, this volume). Adding in individuals whose occupation involves some kind of governmental certiﬁcation or eventual licensing brings the total to 38 per cent of the US workforce (Kleiner and Krueger 2009). Inthe United Kingdom, the percentage of the workforce that requires a government licence in order to work has doubled in the past 12 years to more than 13 per cent (Humphris et al. 2010). Examining the reasons for the growth and its economic implications is an important issue for understanding and analysing labour market institutions.