Date of Completion

Spring 5-1-2023

Thesis Advisor(s)

Mike Shor

Honors Major

Economics

Disciplines

Economics | Labor Economics | Public Economics

Abstract

In this paper, I explore explanations for and effects of variation in stringency in occupational licensing requirements across states. Focusing on data on cosmetology, I first analyze the effect of characteristics of the professional licensing board, including its membership composition and department within the state government, on the regulations the board implements. I find evidence that the department of a board impacts its licensing fees, with health-based departments requiring lower fees than commerce- and general licensing-based departments. I then examine the effects of stringency on wages and the number of practitioners in an area. I find evidence that the number of days to obtain licensure positively affects the mean annual wage, but not the median annual wage, implying differential effects for high- and low-earners. In a case study of Massachusetts, I find evidence that a decrease in stringency lead to increased wages and fewer practitioners, contrary to economic theory. Finally, I find that the board department appears to directly affect the mean and median annual wage, though the pathway is unclear. Several unanswered questions remain, and future research should incorporate instrumental variable regression to avoid the limitations of this analysis.

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