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Now You Can Take It with You: Effects of Occupational Credential Recognition on Labor Market Outcomes

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  • Kihwan Bae

    (West Virginia University)

  • Edward Timmons

    (West Virginia University)

Abstract

Occupational credentials are typically not portable across geography. Using policy reforms by U.S. states, we show that the limited portability of occupational licenses constrains labor market activity and geographic mobility of licensed individuals. After states implement universal recognition, a policy that allows individuals with occupational licenses issued by other states to work without repeating a costly relicensing procedure, we find that the employment ratio increases by 0.98 percentage points among licensed individuals in the sample relative to unlicensed individuals. The employment effect is co-driven by additional labor market participation and a reduction in unemployment after the policy. With the employment effect, we also find some evidence of a decline in hourly wages among licensed individuals after the policy. Regarding geographic mobility, we show that migration into states with universal recognition increased by 0.77 percentage points or 48.4% among individuals with low portability licenses. Our findings suggest that universal recognition improves license portability and labor market efficiency.

Suggested Citation

  • 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.
    • Handle: RePEc:wvu:wpaper:23-03
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    File URL: https://researchrepository.wvu.edu/cgi/viewcontent.cgi?article=1067&context=econ_working-papers
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    2. Shishir Shakya & Alicia Plemmons & Conor Norris, 2024. "Military Spouse Licensing: A Case Study of Registered Nurses within Military Bases Proximity," Working Papers 24-09, Department of Economics, Appalachian State University.
    3. Shishir Shakya & Alicia Plemmons & Conor Norris, 2024. "Military spouse licensing: a case study of registered nurses near military bases," Journal of Regulatory Economics, Springer, vol. 66(2), pages 135-156, December.
    4. Makridis, Christos & McLaughlin, Patrick, 2024. "How State Occupational Licenses Affect Jobs and Salaries," Working Papers 12543, George Mason University, Mercatus Center.

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