Occupational Licensing in the United States

Occupational licensing—the requirement that individuals attain a license to legally perform a specific job—is now necessary for over a fifth of the US workforce. The policy is intended to protect consumers by ensuring members of licensed occupations meet a minimum quality standard but comes at the cost of higher prices for their services. Economic theory and research support the argument that at least in some cases the costs of licensure exceed its benefits. Incumbent members of licensed occupations gain from the higher wages caused by licensure policies, creating a strong incentive for them to push for stricter regulations and resist any efforts to remove or loosen licensure requirements. However, despite bipartisan interest in licensure reform, data limitations and vast heterogeneity in licensure policies limit the usefulness of existing research in guiding its design.