The Spillover Effects of Labor Regulations on the Structure of Earnings and Employment: Evidence from Occupational Licensing
The paper titled "The Spillover Effects of Labor Regulations on the Structure of Earnings and Employment: Evidence from Occupational Licensing" by Samuel Dodini has been published in Journal of Public Economics.
Abstract
This paper measures how labor regulations affect the structure of earnings and employment in other occupations in the context of occupational licensing. Using a state boundary discontinuity design, I estimate the market spillovers of licensing on other occupations with similar skills, which I classify using hierarchical clustering techniques on skills data from O*NET. I find evidence of negative earnings and employment spillovers, with the largest earnings effects concentrated among women, black, and foreign-born Hispanic workers. These effects lead to greater earnings inequality. The results are most consistent with licensing changing skill- and industry-specific labor demand and with a monopsony model where licensing increases search costs and reduces workers’ outside options.