Panel Paper: Is Occupational Licensing a Barrier to Interstate Migration?

Thursday, November 6, 2014 : 3:05 PM
Navajo (Convention Center)

*Names in bold indicate Presenter

Janna Johnson and Morris Kleiner, University of Minnesota
Occupational licensing at the state level has been one of the fastest growing labor market institutions in the United States over the past 60 years. The percent of the workforce licensed at the state level grew from around 5 percent in the 1950s to almost 23 percent in 2008, with an almost 28 percent increase since 1980. In addition, the gross flows of people across states have declined by around 50 percent during the past 20 years. We examine to what extent occupational licensing statutes, which impose regulatory costs on moving across state lines, may be a contributing factor to the decline in interstate migration. Specifically, we employ a difference-in-difference strategy using data from the American Community Survey along with changes in statues on state reciprocity and endorsement from 2001 to 2012 to analyze the effect of these changes on interstate migration rates. We also use propensity matching methods for elementary and secondary teachers, lawyers, and barbers and hairdressers, all universally licensed occupations, and find that they experienced significantly lower interstate migration rates than other professions over the period, but they move within states at a comparable rate.