Table 8 Selected recent studies on the effects of occupational licensing on income.
From: Does occupational licensing impact incomes? A replication study for the German crafts case
Study | Country | Occupation | Methodology | Main finding |
|---|---|---|---|---|
White (1980) | USA | Registered nurses | Three-stage least-squares | Licensing has no impact on pay |
Kleiner and Petree (1988) | USA | Teachers | Fixed effects analysis | Licensing has no impact on teacher pay |
Kleiner (2000) | USA | Dentists, lawyers, barbers and cosmetologists | Residual wage gap analysis | Earnings are higher for licensed occupations that require more education and training relative to comparable unlicensed occupations |
Kleiner and Kudrle (2000) | USA | Dentists | Tobit specification, OLS, reduced form equations using sample of Air Force recruits | Practitioners in the most regulated states earn 12% more than those in the least regulated states |
Angrist and Guryan (2007) | USA | Teachers | Estimation of wage equations | State-mandated teacher testing slightly increases teacher salaries (2.4–3.4%) |
Timmons and Thornton (2008) | USA | Radiologic technologists | OLS, IV | Radiologic technologists working in states with licensing statutes earn 3.3–6.9% more |
Timmons and Thornton (2013) | USA | Massage therapists | OLS, with duration effects | Massage therapists working in states with licensing receive an earnings premium 16.2% |
Bol (2014) | Germany | Crafts | Two-level multilevel regression models | Self-employed craftsmen subject to occupational licensing receive 13% higher income |
Bol and Weeden (2015) | Germany and UK | National level | Multilevel random intercept models | Positive wage returns to occupational licensing in both countries (9% in Germany, 8% in the UK) |
Kleiner et al. (2016) | USA | Medical services | Two-way fixed effects estimation of wage equation | Removing prescription authority regulations increased wages of the deregulated by 5% and decreased wages of the regulated by 3% |
Zapletal (2017) | USA | Cosmetologists | Pooled OLS with year fixed effects | Occupational licensing does not affect market prices |
Redbird (2017) | USA | National level | Multilevel fixed effects model and longitudinal model | No aggregate wage effect of licensure |
Pizzola and Tabarrok (2017) | USA | Funeral services | Difference-(in-differences)-in-differences, synthetic control | Occupational licensing causes wage premium of 11–12% |
Damelang et al. (2018) | Germany | Crafts | Difference-in-difference approach | Removing occupational licensing has reduced earnings of craft employees by 13 Euros per month |
Lergetporer et al. (2018) | Germany | Crafts | Difference-in-difference estimation, entropy balancing | Removing occupational licensing has decreased wages of workers by 2.3%. No effect on the self-employed |
Ingram (2018) | USA | National level | Matching estimator, simple border state framework | Licensed workers have an income premium of 4–6% |
Sonntag and Lutter (2018) | Germany | Crafts | Difference-in-differences estimation | Very small (hardly detectable) income effects of removing occupational licensing found |