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Licensing

Paper Session

Sunday, Jan. 5, 2025 8:00 AM - 10:00 AM (PST)

Parc 55, Mission 2 & 3
Hosted By: Labor and Employment Relations Association
  • Chair: Vitor Melo, West Virginia University

The Impact of Recognizing Foreign Occupational Credentials on Long-Term Labor Market Outcomes in Canada

Tingting Zhang
,
University of Illinois-Urbana-Champaign

Abstract

Numerous studies have shown that recognizing occupational credentials can mitigate wage disparities among vulnerable worker groups. Consequently, Canadian federal and provincial governments have advised professional associations on establishing alternative pathways for recognizing foreign occupational credentials to ease immigrants' integration into the labor market. However, the effectiveness of such policy efforts has not been empirically evaluated. By linking a representative immigration survey with longitudinal administrative records, I examined whether immigrants whose foreign occupational credentials were accepted in Canada had better earnings than those without such credentials upon arrival. The sample was divided into four groups: immigrants without any occupational credentials before and after landing (the baseline group), immigrants with a foreign occupational credential that was accepted in Canada, immigrants with foreign occupational credentials that were not accepted in Canada, and immigrants who acquired a Canadian occupational credential after landing. Growth curve modeling results show that, compared to the baseline group, immigrants with recognized foreign credentials earned lower earnings, while those with Canadian occupational credentials earned significantly higher earnings. These earning gaps persisted over time. The findings suggest that human capital and monopoly theories may not adequately explain the earnings premiums associated with occupational credentials, including both licensure and certification.

Universal Licensing Recognition (ULR), Whether Illinois Should Adopt It?

Wenchen Wang
,
Illinois Institute of Technology

Abstract

Occupational licensing is usually considered as a barrier to interstate migration, since it requires practitioners to invest more time and money to meet new state-specific licensing requirements in the states they intend to move to, even though they are licensed and have already met the licensing requirements in the current states they are working at. A recent trend is the adoption of Universal Licensing Recognition (ULR), where out-of-state licenses are recognized based on completed training or testing requirements. As of August 2023, about one-third of the states in the U.S. has enacted broad universal recognition. Other states have passed a lighter version of the reform with an eye toward broader recognition in the future. Illinois is among the states that have yet to join this trend, but currently has HB5608 under review. This paper uses American Community Survey (ACS) data to evaluate licensing's effects on various labor market outcomes including interstate migration, labor force participation, employment, hourly wage, and usual hours worked. Baseline methodology adopted is Callaway & Sant’anna (2021) difference-in-difference (DID), with other staggered DID methods as robustness checks. Results show that ULR has significant and positive impacts on interstate migration and employment for states that have adopted this policy comparing with Illinois. This paper intends to provide valuable insights for Illinois state policymakers considering this reform.

Effects of Occupational Licensing on Migrants' Labor Supply: Evidence from Military Spouses in the U.S.

Kihwan Bae
,
West Virginia University

Abstract

In this paper, we analyze how occupational licensing affects the labor supply of interstate migrants in the U.S. To identify the effect, we focus on the sample of military spouses in licensed occupations, who frequency move across states because of their spouse's career in U.S. armed forces, and who may have to obtain a new license after interstate moves. The military spouses have two advantages over other people for the study. First, the migration of military spouses is mostly determined by the government order on their spouse, which is a quasi-random shock to their post-move labor market outcomes. Next, states have adopted expedited licensing programs for military spouses with out-of-state licenses to mitigate burdens of occupational licensing on them. I first show that military spouses in licensed occupations were about 25 percentage points less likely to be employed in the year of interstate move than they were in other years, which is a larger in magnitude than the negative employment effect of migration on military spouses in unlicensed occupations (18 percentage points). Then, I show that the employment ratio increased by 16 percentage points among military spouses in licensed occupations in the year of interstate move after the expedited licensure program. By contrast, I find little effect on military spouses who did not move in the previous year. Overall, these findings support that the expedited licensing program for military spouses is effective to relax military spouses from licensing burdens from periodical relocations in distance. A general implication of the study is that license portability programs are crucial to improve labor market outcomes of interstate migrants working in licensed occupations.

The Labor Market Effects of Occupational Licensing in the Public Sector

Morris Kleiner
,
University of Minnesota
Wenchen Wang
,
Illinois Institute of Technology

Abstract

In the U.S., occupational licensing is more prevalent in the public sector than in the private sector, but the influence of occupational regulation for public sector workers, and how it is compared to that of private sector workers, has not been analyzed in detail. Our study examines how licensing impacts key labor market outcomes of wages and part-time work. Our results show that having an occupational license has positive effects on hourly wages and negative effects on the probability of part-time work in both sectors, mirroring licensing's effects as a whole. When we break down licensing's effects into sector comparison using an interaction term between licensing and sector, licensing's wage effect is less in the public sector, and public sector workers have less probability to involve in part-time work. We further look at how licensing differentially affects the wage distribution between the two sectors using unconditional quantile regression, and we find that at the lower wage distribution, licensing's wage effects are almost the same between the public and the private sector. The difference of licensing's wage effects between two sectors becomes larger as we move along the wage distribution quantiles.

Discussant(s)
Samuel Dodini
,
Norwegian School of Economics
Yun Taek Oh
,
University of Nevada-Reno
JEL Classifications
  • J0 - General