Occupational Licensing Regulations and Unemployment During the Great Recession

Abstract

Recent research examined the link between occupational licensing and unemployment. If occupational licensing creates barriers to employment, we would expect highly licensed states to experience greater increases in unemployment than other states during recessions when jobs are especially scarce. This study examines panel and cross-sectional data to see if counties under severe state licensing requirements suffered from greater unemployment increases during and after the Great Recession of 2007-2009. The estimates in both panel and cross-sectional analysis find higher increases in unemployment during and after the recession in counties that were in states imposing high licensing burdens, controlling for relevant factors.