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The Origins and Evolution of Occupational Licensing in the United States
Occupational licensing has become one of the most prevalent forms of labor market regulation in the United States. Recent estimates from the Bureau of Labor Statistics show that about 20 percent of workers currently hold an active license, twice the share who belong to a labor union. While growing research has shown that licensing requirements have significant economic effects on workers and consumers, relatively little is known about the development of the institution itself: How did licensing laws originate? What were the key factors in their evolution? And why has licensing spread to such a broad swath of the labor market?
Our research addresses these questions using several datasets. The first records the enactment of state and federal licensing laws from 1870 to 2020; it contains the timing of policy changes for over 250 detailed occupations, covering the vast majority of licensed jobs in the United States. The second dataset comes from a research team in the Institute for Social Research and Data Innovation at the University of Minnesota, which is recording the evolution of qualifications workers must demonstrate to obtain a license. It includes training standards, continuing education, and other requirements for certain licensed occupations. Data from these sources show that the share of the workforce covered by licensing requirements increased from about 5 percent in 1950 to at least 20 percent today. Most of this growth occurred due to the enactment of new laws.
Our research addresses these questions using several datasets. The first records the enactment of state and federal licensing laws from 1870 to 2020; it contains the timing of policy changes for over 250 detailed occupations, covering the vast majority of licensed jobs in the United States. The second dataset comes from a research team in the Institute for Social Research and Data Innovation at the University of Minnesota, which is recording the evolution of qualifications workers must demonstrate to obtain a license. It includes training standards, continuing education, and other requirements for certain licensed occupations. Data from these sources show that the share of the workforce covered by licensing requirements increased from about 5 percent in 1950 to at least 20 percent today. Most of this growth occurred due to the enactment of new laws.
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