Becker Friedman Institute

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Job Market Signaling through Occupational Licensing

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.

Authors: 
Peter Blair, Clemson University
Bobby Chung, Clemson University
Publication Date: 
June, 2017
Publication Status: 
Document Number: 
2017-50
File Description: 
Third version, June 27, 2018