Discussion paper

DP17027 Occupational Regulation, Institutions, and Migrants’ Labor Market Outcomes

We study how licensing, certification and unionisation affect the wages of natives and migrants and their
representation among licensed, certified, and unionized workers. We provide evidence of a dual role of labor
market institutions, which both screen workers based on unobservable characteristics and also provide them
with wage setting power. Labor market institutions confer significant wage premia to native workers (4, 1.6,
and 2.7 log points for licensing, certification, and unionization respectively), due to screening and wage
setting power. Wage premia are significantly larger for licensed and certified migrants (10.3 and 6.6 log
points), reflecting a more intense screening of migrant than native workers. The representation of migrants
among licensed (but not certified or unionized) workers is 15% lower than that of natives. This again implies
a more intense screening of migrants by licensing institutions than by certification and unionization.


Koumenta, M, M Pagliero and D Rostam-Afschar (2022), ‘DP17027 Occupational Regulation, Institutions, and Migrants’ Labor Market Outcomes‘, CEPR Discussion Paper No. 17027. CEPR Press, Paris & London. https://cepr.org/publications/dp17027