Doctoral Dissertation Research: The Impact of Occupational Licensing on Wages, Inequality, and Diversity

Stanford University, Stanford CA

Investigators

Abstract

SES - 1303612 PI: David Grusky Co-PI: Beth Red Bird Stanford University This project explores ways in which licensing in an occupation impacts wages and wage inequality among workers, and how this relationship might vary based on the demographic features of workers and occupations. There is notable contemporary research concerned with new forms of stratification associated with income inequality, particularly types resulting from changes in the structure of the labor market. Much of this literature, however, has focused on the shifting reward structure between groups, ignoring the equally important possibility that new structures produce different reward opportunities within groups. This project fills a gap in past research by focusing on a dramatic change in labor market structure: the rise in occupational licensing. Specifically, this research explores: (1) how wage benefits derive from licensure, (2) whether licensure impacts wage inequality within occupations, and (3) whether licensure restructures the workforce in terms of gender and race. The study uses nationally representative data collected over the last thirty years to understand how one of the most substantial labor force trends of our time is altering the structure of wages, inequality, and diversity within occupations. While neoclassical economic theory provides a useful starting point from which to understand these changes, this project also explores ways in which licensure itself may create mechanisms through which wages and prestige are re-structured, a process that is enhanced by the institutionalization that accompanies licensure. Licensure is expected to produce a modest wage premium for licensed workers, it also creates a state-endorsed semi-meritocratic structure which may further stratify reward structures. Thus, it is hypothesized that licensure increases inequality while simultaneously increasing rewards to traditionally disadvantaged groups. Broader Impacts: Licensure is becoming a method of regulating occupations, usually in the name of enhancing quality of workers and reducing risks to the consuming public. However, the effects of licensure on the composition of intra-occupational labor markets and on the wage inequality experienced by workers are relatively unknown. This project offers the opportunity to bring empirical evidence to bear on questions about state policies that can enable efforts relative to their impact on efficiencies in the workplace, on satisfaction of workers, and on wages and wage inequality within varying communities.