Working Paper: NBER ID: w24107
Authors: Janna E. Johnson; Morris M. Kleiner
Abstract: Occupational licensure, one of the most significant labor market regulations in the United States, may restrict the interstate movement of workers. We analyze the interstate migration of 22 licensed occupations. Using an empirical strategy that controls for unobservable characteristics that drive long-distance moves, we find that the between-state migration rate for individuals in occupations with state-specific licensing exam requirements is 36 percent lower relative to members of other occupations. Members of licensed occupations with national licensing exams show no evidence of limited interstate migration. The size of this effect varies across occupations and appears to be tied to the state specificity of licensing requirements. We also provide evidence that the adoption of reciprocity agreements, which lower re-licensure costs, increases the interstate migration rate of lawyers. Based on our results, we estimate that the rise in occupational licensing can explain part of the documented decline in interstate migration and job transitions in the United States.
Keywords: occupational licensing; interstate migration; labor market regulation; reciprocity agreements
JEL Codes: H7; J01; J08; J1; J11; J18; J24; J44; J58; J6; J8; K0; K2; K31; L38; L51; L98
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Occupational licensing (J44) | Restriction of interstate migration (F22) |
| State-specific licensing exam requirements (K29) | Restriction of interstate migration (F22) |
| Reciprocity agreements (Z38) | Increase in interstate migration rate of lawyers (K37) |
| Rise in occupational licensing (J44) | Decline in interstate migration and job transitions (J62) |
| Relicensure costs (D45) | Limitation of job opportunities and wage growth (F66) |