The Effect of Occupational Licensing on Women and Minorities in Utah

All state governments require occupational licenses in order to work in certain fields. Previous research and economic theory suggest occupational licenses are used to restrict the entry of workers into a chosen field, thus lowering the competition in a certain field (Young, 2012). Though costly to the licensed businesses, the lowered competition results in the ability to charge higher prices which may result in a net gain for the licensee (Stigler, 1971; Peltzman, 1976). We collect, analyze, and create an index from data on Utah\u27s licensed occupations to explore how occupational licensing affects women and minorities. In our ordinary least squares regression we focus on price to submit an application, years of training, and cost of necessary exams to determine which fields were most impacted by occupational licensure. We then compare the data we used with the demographic data of workers in those fields. We find that women and minorities are disproportionately affected - meaning they bear more of the costs from occupational licensing than other segments of the population. This suggests laws meant to protect the population sometimes impose costs on other segments of the population. Young, David S. (2002). Occupational Licensing. Library of Economics and Liberty. Retrieved from: http://www.econlib.org/library/Enc1/OccupationalLicensing.html#abouttheauthor Peltzman, Samuel. (1976). Toward a more general theory of regulation. The Journal of Law & Economics, Vol. 19, 211-240. Stigler, George J. (1971). The Theory of Economic Regulation. The Bell Journal of Economics and Management Science, Vol. 2, No. 1. 3-21