Citation

Discussion Paper Details

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Title: Occupational Licensing, Labor Mobility, and the Unfairness of Entry Standards

Author(s): Mario Pagliero

Publication Date: July 2018

Keyword(s): bar exam, Labor market regulation, legal market, licensing and occupational regulation

Programme Area(s): Industrial Organization, Labour Economics and Public Economics

Abstract: The combination of occupational licensing at the local market level often coexists with labor mobility across local markets. We empirically study a labor market in which a district-specific entry (licensing) examination is coupled with labor mobility across districts. Our analysis exploits a change in the grading procedure of the exam, from grading in the local district to grading in a randomly assigned different district. We document that licensing regulation leads to extreme heterogeneity across markets in admission outcomes (up to 50 percent differences in licensing exam pass rates), unfair (discriminatory) admission procedures (up to 49 percent unfair exam results), and inefficient mobility of workers. These findings, together with the estimated impact of the reform on exam outcomes and grading standards, provide the first evidence of regulatory competition based on strategic interaction among licensing boards.

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Bibliographic Reference

Pagliero, M. 2018. 'Occupational Licensing, Labor Mobility, and the Unfairness of Entry Standards'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13076