Occupational Licensing: A Case Study of Barriers to Entry in the Labor Market and Beyond
Saturday, Jan. 6, 2018 10:15 AM - 12:15 PM
- Chair: Edward Joseph Timmons, Saint Francis University
Occupational Licensing Reduces Racial and Gender Wage Gaps: Evidence From the Survey of Income and Program Participation
AbstractIn order to work legally, 29% of U.S. workers require an occupational license. We
show that occupational licensing reduces the racial wage gap between white and black
men by 35%, and the gender wage gap between women and white men by 42%. For
black men, a license is a positive indicator of non-felony status that aids in firm
screening of workers, whereas women experience differentially higher returns to the
human capital that is bundled with occupational licenses. The information and human
capital content of licenses enable firms to rely less on race and gender as predictors of
Incorporation Decisions and Job Creation in New Firms
AbstractIn this paper, we study the influences on job creation in new firms that follow from law-induced cost associated with entry as incorporation. To identify these influences empirically, we exploit a natural experiment in regulation that accompanied the German reunification shock and we take potentially endogenous choices of the legal form of organization into account.
We show that an increase in the cost of incorporated entry reduces the emergence of incorporated firms in a population of new firms and raises the gap in average initial job creation between incorporated and unincorporated entrants. The latter result is driven by, in particular, reduced mass in the intermediate range of the entry size distribution among incorporated entrants compared to the one among unincorporated entrants.
Our empirical findings are in line with predictions derived from a theoretical model in which legal form-specific entry size distributions result from profit expectations of entrepreneurs who observe their entrepreneurial type after entry.
Occupational Licensing of Uber Drivers
AbstractAmong the largest barriers to entry for drivers wanting to provide ride sharing services are the occupational licensing requirements issued by state or local governments. These requirements are typically justified by many regulators, taxi drivers, and medallion holders as necessary to maintain a minimum level of safety and quality. We use data from Uber, state and local statutes, and other administrative sources to implement multiple empirical strategies to estimate the causal effects of occupational licensing on the safety and quality of rides (i.e., star ratings, rates of braking and acceleration, and the occurrence of safety incidences), the labor supply of Uber drivers, and the incidence of surge pricing. We use a multi-period difference-in-differences model (DID) to examine the effects on safety and quality of Uber drivers completing a 4-hour defensive driving course in the Seattle metropolitan area. In New York City, we use DID and regression discontinuity models to analyze the effects on safety and quality, labor supply, and surge prices of a 24-hour (3 day) Driver Education Course. Lastly, we utilize the characteristics of Uber’s dispatch algorithm to employ a quasi-random assignment approach to compare quality and safety outcomes for licensed and unlicensed Uber drivers within the Washington, D.C., New Jersey, and Houston metropolitan areas. We also use the quasi-random assignment approach to compare quality and safety outcomes of licensed and unlicensed Uber drivers who operate on the same Uber service within a variety of metropolitan areas. Our estimates provide the first analysis of the role of occupational licensing for the rapidly growing ride-sharing industry.
- J4 - Particular Labor Markets
- K2 - Regulation and Business Law