The Alliance for Responsible Professional Licensing commissioned Oxford Economics to produce a quantitative study to explore the impacts of professional licensing in highly complex, technical fields.
We find that, across all professions and occupations, licensing is associated with a 6.5% average increase in hourly earnings, even after accounting for the job holder’s educational attainment, gender, and racial demographics.
When dividing up the sample by occupational skill level, we find that those workers in trade and vocational occupations (e.g., barber, plumber, etc.) can expect a 7.1% hourly wage increase after becoming licensed, while those in a profession requiring advanced education and training (e.g., engineer, architect, etc.) can expect a 3.6% wage increase after becoming licensed.
In addition, among professionals in technical fields requiring significant education and training, a license is found to narrow both the gender-driven and the race-driven wage gap.
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