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The costs and potential benefits of occupational licensing: A case of real estate license reform

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  • Chung, Bobby W.

Abstract

Occupational licensing potentially benefits consumers by screening and training workers but at the cost of lower supply. To evaluate this trade-off, I leverage a quasi-experimental setting in which Illinois required compliance training for new and existing real estate agents. Analyzing multiple data sources (licensee registration, aggregate housing statistics, and a national household survey), I find that the reform caused a one-time spike in agent outflows and a decrease in home sales, with female and novice agents being less likely to stay. For the policy intention, I do not find strong evidence that the reform reduced new misconduct incidents.

Suggested Citation

  • Chung, Bobby W., 2022. "The costs and potential benefits of occupational licensing: A case of real estate license reform," Labour Economics, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:labeco:v:76:y:2022:i:c:s092753712200063x
    DOI: 10.1016/j.labeco.2022.102172
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    References listed on IDEAS

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    Cited by:

    1. Bobby Chung & Jian Zou, 2021. "Teacher Licensing, Teacher Supply, and Student Achievement: Nationwide Implementation of edTPA," Working Papers 2021-039, Human Capital and Economic Opportunity Working Group.
    2. Ben Posmanick & Alex Obie & Bobby Chung, 2024. "Licensed Professionals and Corporate Board Performance: The Effect of the Sarbanes-Oxley Act on the Audit Committee," Working Papers 2024-03, University of South Florida, Department of Economics.
    3. 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.
    4. Busso, Matías & Montaño, Sebastián & Muñoz-Morales, Juan S., 2023. "Signaling Specific Skills and the Labor Market of College Graduates," IDB Publications (Working Papers) 12720, Inter-American Development Bank.
    5. Bruno Deffains & Dominique Demougin, 2023. "Capitation taxes and the regulation of professional services," European Journal of Law and Economics, Springer, vol. 55(2), pages 167-193, April.
    6. Peter Q. Blair & Mischa Fisher, 2022. "Does Occupational Licensing Reduce Value Creation on Digital Platforms?," NBER Working Papers 30388, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Occupational licensing; Employment; Quality; Real estate license; Labor supply;
    All these keywords.

    JEL classification:

    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • K25 - Law and Economics - - Regulation and Business Law - - - Real Estate Law
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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