IDEAS home Printed from https://ideas.repec.org/a/bla/brjirl/v59y2021i3p730-756.html
   My bibliography  Save this article

Occupational Licensing and the Skills Mismatch of Highly Educated Migrants

Author

Listed:
  • Massimiliano Tani

Abstract

This article studies occupational licensing as a possible cause of education–occupation mismatches of highly educated migrants. Based on data from the Longitudinal Survey of Immigrants to Australia (LSIA), the empirical analysis applies the Propensity Score Matching estimator to identify a suitable control group. Licensing raises hourly wages and reduces over‐education for those working in licensed jobs, and correspondingly it produces worse labour market outcomes for those who do not gain licensure. These results are robust to omitted variable bias and alternative matching approaches. They also persist over time, suggesting that the sole market forces of supply and demand are not enough to reduce the mismatch faced by highly educated migrants after settlement.

Suggested Citation

  • Massimiliano Tani, 2021. "Occupational Licensing and the Skills Mismatch of Highly Educated Migrants," British Journal of Industrial Relations, London School of Economics, vol. 59(3), pages 730-756, September.
    • Handle: RePEc:bla:brjirl:v:59:y:2021:i:3:p:730-756
    DOI: 10.1111/bjir.12574
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/bjir.12574
    Download Restriction: no
    File URL: https://libkey.io/10.1111/bjir.12574?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nieto, Sandra & Matano, Alessia & Ramos, Raul, 2013. "Skill Mismatches in the EU: Immigrants vs. Natives," IZA Discussion Papers 7701, Institute of Labor Economics (IZA).
    2. Morris M. Kleiner & Alan B. Krueger, 2010. "The Prevalence and Effects of Occupational Licensing," British Journal of Industrial Relations, London School of Economics, vol. 48(4), pages 676-687, December.
    3. Morris M. Kleiner, 2000. "Occupational Licensing," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 189-202, Fall.
    4. Christian Dustmann & Francesca Fabbri, 2003. "Language proficiency and labour market performance of immigrants in the UK," Economic Journal, Royal Economic Society, vol. 113(489), pages 695-717, July.
    5. Lesleyanne Hawthorne, 2015. "The Impact of Skilled Migration on Foreign Qualification Recognition Reform in Australia," Canadian Public Policy, University of Toronto Press, vol. 41(s1), pages 173-187, August.
    6. Joseph G. Altonji & Charles R. Pierret, 2001. "Employer Learning and Statistical Discrimination," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 313-350.
    7. Janna E. Johnson & Morris M. Kleiner, 2020. "Is Occupational Licensing a Barrier to Interstate Migration?," American Economic Journal: Economic Policy, American Economic Association, vol. 12(3), pages 347-373, August.
    8. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April.
    9. Hugh Cassidy & Tennecia Dacass, 2021. "Occupational Licensing and Immigrants," Journal of Law and Economics, University of Chicago Press, vol. 64(1), pages 1-28.
    10. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    11. Leilanie Basilio & Thomas K. Bauer & Anica Kramer, 2017. "Transferability of Human Capital and Immigrant Assimilation: An Analysis for Germany," LABOUR, CEIS, vol. 31(3), pages 245-264, September.
    12. Leuven, Edwin & Oosterbeek, Hessel, 2011. "Overeducation and Mismatch in the Labor Market," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 283-326, Elsevier.
    13. Morris M. Kleiner & Robert T. Kudrle, 1997. "Does Regulation Affect Economic Outcomes?: The Case of Dentistry," NBER Working Papers 5869, National Bureau of Economic Research, Inc.
    14. Gilbert Becker, 1986. "The public interest hypothesis revisited: A new test of Peltzman's theory of regulation," Public Choice, Springer, vol. 49(3), pages 223-234, January.
    15. Séamus McGuinness, 2006. "Overeducation in the Labour Market," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 387-418, July.
    16. Mario Pagliero & Edward Timmons, 2013. "Occupational Regulation in the European Legal Market," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 10(2), pages 243-265, August.
    17. Steven Wald & Tony Fang, 2008. "Overeducated Immigrants in the Canadian Labour Market: Evidence from the Workplace and Employee Survey," Canadian Public Policy, University of Toronto Press, vol. 34(4), pages 457-480, December.
    18. Pernilla Joona & Nabanita Gupta & Eskil Wadensjö, 2014. "Overeducation among immigrants in Sweden: incidence, wage effects and state dependence," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-23, December.
    19. Maury Gittleman & Morris M. Kleiner, 2016. "Wage Effects of Unionization and Occupational Licensing Coverage in the United States," ILR Review, Cornell University, ILR School, vol. 69(1), pages 142-172, January.
    20. Mariya Aleksynska & Ahmed Tritah, 2009. "Immigration, Income and Productivity of Host Countries: a Channel Accounting Approach," Working Papers 2009-23, CEPII research center.
    21. Pashigian, B Peter, 1979. "Occupational Licensing and the Interstate Mobility of Professionals," Journal of Law and Economics, University of Chicago Press, vol. 22(1), pages 1-25, April.
    22. Matloob Piracha & Massimiliano Tani & Florin Vadean, 2012. "Immigrant over- and under-education: the role of home country labour market experience," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-21, December.
    23. Emily Oster, 2019. "Unobservable Selection and Coefficient Stability: Theory and Evidence," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(2), pages 187-204, April.
    24. Chiswick, Barry R. & Miller, Paul W., 2009. "The international transferability of immigrants' human capital," Economics of Education Review, Elsevier, vol. 28(2), pages 162-169, April.
    25. Tani, Massimiliano, 2017. "Local signals and the returns to foreign education," Economics of Education Review, Elsevier, vol. 61(C), pages 174-190.
    26. Rebecca Lessem & Carl Sanders, 2020. "Immigrant Wage Growth In The United States: The Role Of Occupational Upgrading," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(2), pages 941-972, May.
    27. Leland, Hayne E, 1979. "Quacks, Lemons, and Licensing: A Theory of Minimum Quality Standards," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1328-1346, December.
    28. Gordon H. Hanson, 2012. "Immigration and Economic Growth," Cato Journal, Cato Journal, Cato Institute, vol. 32(1), pages 25-34, Winter.
    29. Dolton, Peter & Vignoles, Anna, 2000. "The incidence and effects of overeducation in the U.K. graduate labour market," Economics of Education Review, Elsevier, vol. 19(2), pages 179-198, April.
    30. Adriana D. Kugler & Robert M. Sauer, 2005. "Doctors without Borders? Relicensing Requirements and Negative Selection in the Market for Physicians," Journal of Labor Economics, University of Chicago Press, vol. 23(3), pages 437-466, July.
    31. Brenton Peterson & Sonal Pandya & David Leblang, 2014. "Doctors with borders: occupational licensing as an implicit barrier to high skill migration," Public Choice, Springer, vol. 160(1), pages 45-63, July.
    32. Alexander M. Danzer & Barbara Dietz, 2014. "Labour Migration from Eastern Europe and the EU's Quest for Talents," Journal of Common Market Studies, Wiley Blackwell, vol. 52(2), pages 183-199, March.
    33. Green, Colin & Kler, Parvinder & Leeves, Gareth, 2007. "Immigrant overeducation: Evidence from recent arrivals to Australia," Economics of Education Review, Elsevier, vol. 26(4), pages 420-432, August.
    34. Peter Q. Blair & Bobby W. Chung, 2019. "How Much of Barrier to Entry is Occupational Licensing?," British Journal of Industrial Relations, London School of Economics, vol. 57(4), pages 919-943, December.
    35. Samuel J. Ingram, 2019. "Occupational Licensing and the Earnings Premium in the United States: Updated Evidence from the Current Population Survey," British Journal of Industrial Relations, London School of Economics, vol. 57(4), pages 732-763, December.
    36. Morris M. Kleiner, 2006. "Licensing Occupations: Ensuring Quality or Restricting Competition?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number lo.
    37. A. Frank Adams III & Robert B. Ekelund Jr. & John D. Jackson, 2003. "Occupational Licensing of a Credence Good: The Regulation of Midwifery," Southern Economic Journal, John Wiley & Sons, vol. 69(3), pages 659-675, January.
    38. Benham, Lee & Benham, Alexandra, 1975. "Regulating Through the Professions: A Perspective on Information Control," Journal of Law and Economics, University of Chicago Press, vol. 18(2), pages 421-447, October.
    39. Alan Barrett & Séamus McGuinness & Martin O'Brien, 2012. "The Immigrant Earnings Disadvantage across the Earnings and Skills Distributions: The Case of Immigrants from the EU's New Member States," British Journal of Industrial Relations, London School of Economics, vol. 50(3), pages 457-481, September.
    40. Jacques Poot & Steven Stillman, 2010. "The importance of heterogeneity when examining immigrant education-occupation mismatch: evidence from New Zealand," RF Berlin - CReAM Discussion Paper Series 1023, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    41. Charles G. Carpenter & E. Frank Stephenson, 2006. "The 150-Hour Rule as a Barrier to Entering Public Accountancy," Journal of Labor Research, Transaction Publishers, vol. 27(1), pages 115-126, January.
    42. Maya N. Federman & David E. Harrington & Kathy J. Krynski, 2006. "The Impact of State Licensing Regulations on Low-Skilled Immigrants: The Case of Vietnamese Manicurists," American Economic Review, American Economic Association, vol. 96(2), pages 237-241, May.
    43. Sarah Voitchovsky, 2014. "Occupational downgrading and wages of New Member States immigrants to Ireland," International Migration Review, Wiley Blackwell, vol. 48(2), pages 500-537, June.
    44. Peter Q. Blair & Bobby W. Chung, 2018. "How Much of Barrier to Entry is Occupational Licensing?," NBER Working Papers 25262, National Bureau of Economic Research, Inc.
    45. Edward Timmons & Robert Thornton, 2008. "The Effects of Licensing on the Wages of Radiologic Technologists," Journal of Labor Research, Springer, vol. 29(4), pages 333-346, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rycx, François & Santosuosso, Giulia & Vermeylen, Guillaume, 2022. "The Over-Education Wage Penalty among PhD Holders: A European Perspective," IZA Discussion Papers 15417, Institute of Labor Economics (IZA).
    2. Brown, Xin, 2023. "Labor market impacts of state-level occupational licensing of undocumented immigrants," Research in Economics, Elsevier, vol. 77(4), pages 478-496.
    3. Mengjie Lyu & Tingting Zhang & Hua Ye, 2023. "Labour market impacts of occupational licensing and delicensing: New evidence from China," British Journal of Industrial Relations, London School of Economics, vol. 61(4), pages 895-921, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tani, Massimiliano, 2018. "Selective immigration policies, occupational licensing, and the quality of migrants’ education-occupation match," GLO Discussion Paper Series 206, Global Labor Organization (GLO).
    2. Tani, Massimiliano, 2018. "Selective Immigration, Occupational Licensing, and Labour Market Outcomes of Foreign-Trained Migrants," IZA Discussion Papers 11370, Institute of Labor Economics (IZA).
    3. Schwientek, Caroline, 2016. "Are immigrants overeducated in Germany? Determinants and wage effects of educational mismatch," FAU Discussion Papers in Economics 07/2016, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    4. Koumenta, Maria & Pagliero, Mario & Rostam-Afschar, Davud, 2022. "Occupational Regulation, Institutions, and Migrants’ Labor Market Outcomes," Labour Economics, Elsevier, vol. 79(C).
    5. Mengjie Lyu & Tingting Zhang & Hua Ye, 2023. "Labour market impacts of occupational licensing and delicensing: New evidence from China," British Journal of Industrial Relations, London School of Economics, vol. 61(4), pages 895-921, December.
    6. Tani, Massimiliano, 2017. "Local signals and the returns to foreign education," Economics of Education Review, Elsevier, vol. 61(C), pages 174-190.
    7. Kihwan Bae & Edward Timmons, 2023. "Now You Can Take It with You: Effects of Occupational Credential Recognition on Labor Market Outcomes," Working Papers 23-03, Department of Economics, West Virginia University.
    8. Dustin Chambers & Colin O’Reilly, 2022. "The economic theory of regulation and inequality," Public Choice, Springer, vol. 193(1), pages 63-78, October.
    9. Eleni Kalfa & Matloob Piracha, 2017. "Immigrants’ educational mismatch and the penalty of over-education," Education Economics, Taylor & Francis Journals, vol. 25(5), pages 462-481, September.
    10. Alicia Plemmons, 2022. "Occupational licensing's effects on firm location and employment in the United States," British Journal of Industrial Relations, London School of Economics, vol. 60(4), pages 735-760, December.
    11. Matloob Piracha & Florin Vadean, 2013. "Migrant educational mismatch and the labor market," Chapters, in: Amelie F. Constant & Klaus F. Zimmermann (ed.), International Handbook on the Economics of Migration, chapter 9, pages 176-192, Edward Elgar Publishing.
    12. V. Jacobs & F. Rycx & M. Volral, 2022. "Wage Effects of Educational Mismatch According to Workers’ Origin: The Role of Demographics and Firm Characteristics," De Economist, Springer, vol. 170(4), pages 459-501, November.
    13. Edward J Timmons & Anna Mills, 2018. "Bringing the Effects of Occupational Licensing into Focus: Optician Licensing in the United States," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 44(1), pages 69-83, January.
    14. Marek Zapletal, 2019. "The Effects of Occupational Licensing: Evidence from Business‐Level Data," British Journal of Industrial Relations, London School of Economics, vol. 57(4), pages 894-918, December.
    15. Xia, Xing, 2021. "Barrier to Entry or Signal of Quality? The Effects of Occupational Licensing on Minority Dental Assistants," Labour Economics, Elsevier, vol. 71(C).
    16. Pagliero, Mario, 2013. "The impact of potential labor supply on licensing exam difficulty," Labour Economics, Elsevier, vol. 25(C), pages 141-152.
    17. Merve Cim & Michael Kind & Jan Kleibrink, 2020. "Occupational mismatch of immigrants in Europe: the role of education and cognitive skills," Education Economics, Taylor & Francis Journals, vol. 28(1), pages 96-112, January.
    18. Valentine Jacobs, 2021. "Wage Effects of Educational Mismatch According to Workers’ Origin: The Role of Demographics and Firm Characteristics," DULBEA Working Papers 23562, ULB -- Universite Libre de Bruxelles.
    19. Wei Chi & Morris M. Kleiner & Xiaoye Qian, 2017. "Do Occupational Regulations Increase Earnings? Evidence from China," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(2), pages 351-381, April.
    20. Ilya Kukaev & Edward J. Timmons, 2023. "Certifiably employable?: The effects of occupational regulation on unemployment duration," Working Papers 23-02, Department of Economics, West Virginia University.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:brjirl:v:59:y:2021:i:3:p:730-756. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.