Abstract

This article examines the regulatory role of occupational licensing in the USA. Although almost a quarter of jobs require some form of occupational licensing in the USA, the phenomenon has received relatively little attention. The traditional view suggests that such regulations create barriers to entry, increase wages and occupational quality, and improve the quality and safety of goods and services, while increasing prices, and reducing the employment rate. However, recent empirical evidence shows a more complex picture, characterised by heterogeneous effects within regulated occupations and by multiple externalities. Building on economic regulation theories, the article proposes a review and discussion of the recent empirical evidence in this field, and shows how further testable hypothesis might contribute to the development of new regulatory solutions. Although the focus is on the USA, the article ultimately highlights the importance of the topic also for European labour markets.