NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Job Market Signaling through Occupational Licensing

Peter Q. Blair, Bobby W. Chung

NBER Working Paper No. 24791
Issued in July 2018
NBER Program(s):Development of the American Economy, Economics of Education, Industrial Organization, Law and Economics, Labor Studies

A large literature demonstrates that occupational licensing is a labor market friction that distorts labor supply allocation and prices. We show that an occupational license serves as a job market signal, similar to education. In the presence of occupational licensing, we find evidence that firms rely less on observable characteristics such as race and gender in determining employee wages. As a result, licensed minorities and women experience smaller wage gaps than their unlicensed peers.

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Document Object Identifier (DOI): 10.3386/w24791

 
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