Occupational licensure pays off for the licensed

No wonder incumbent members of the occupation or profession are willing to lobby so hard for it [Morris Kleiner, Cato via Arnold Kling]:

Our empirical analysis finds that after controlling for observable heterogeneity, including occupational status, those with a license earn higher pay, are more likely to be employed, and have a higher probability of receiving retirement and pension plan offers. According to our estimates, where governmental licensing is required for the job it raises hourly wages by about 8.4 percent.


  • What good news! What is to be done is clear: require licenses for ALL occupations, not just the ~50% where now required.

    If my estimate of 50% is accurate, then average wages will increase by 4.2%, GDP will rise, and so will property values. Win/win/win.

    • Or, the added costs will drive companies out of business, GDP will fall and so will property values. Lose/lose/lose.

  • So, the licensed members of the guild are ensured employment at rates they collectively set by restricting competition/access to the profession, all others effectively barred from the profession by increasingly higher barriers to entry. Can’t imagine that might have any negative effects on unemployment or class stratification. Nope, none at all… Why don’t you simply suggest everyone be unionized, or better yet, you can be born into your union and for ease of identification, the state will make sure your last name matches – baker, carpenter, cook, fisher, miller, smith, tanner…

  • sorry for omitting the tag. thought that was implicit in the precision estimate.

    Nice touch with the surname reference, CarLitGuy.