Document Type

Working Paper

Publication Date

3-2023

College/Unit

Chambers College of Business and Economics

Document Number

23-03

Department/Program/Center

Economics

Abstract

Occupational credentials are typically not portable across geography. Using policy reforms by U.S. states, we show that the limited portability of occupational licenses constrains labor market activity and geographic mobility of licensed individuals. After states implement universal recognition, a policy that allows individuals with occupational licenses issued by other states to work without repeating a costly relicensing procedure, we find that the employment ratio increases by 0.98 percentage points among licensed individuals in the sample relative to unlicensed individuals. The employment effect is co-driven by additional labor market participation and a reduction in unemployment after the policy. With the employment effect, we also find some evidence of a decline in hourly wages among licensed individuals after the policy. Regarding geographic mobility, we show that migration into states with universal recognition increased by 0.77 percentage points or 48.4% among individuals with low portability licenses. Our findings suggest that universal recognition improves license portability and labor market efficiency.

Download

Included in

Economics Commons

Share

COinS