Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/191853 
Year of Publication: 
2018
Series/Report no.: 
ifh Working Paper No. 11 (2018)
Version Description: 
Updated version, published on 23.08.2018. First version was published on 26.10.2017 with former title 'Do legal restrictions to accessing professions impact incomes? - The German crafts case'
Publisher: 
Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh), Göttingen
Abstract: 
The empirical literature on occupational licensing finds standard monopoly effects of entry regulations: Less competition and economic rents for professionals. I exploit the natural experimental design of a change in the German crafts regulation in 2004, which removed the traditional licensing requirement only for certain trades, and find no robust effects. I point out that existing studies on the income effects of occupational licensing suffer from methodological weaknesses. Most studies rely on cross-section estimates that are likely to be biased due to unobserved heterogeneity whereas others do not rigorously define the population of interest. Based on my results, I suggest that demand-effects and market saturation have so far been inadequately discussed in the literature.
Subjects: 
Labor markets
occupational licensing
monopoly rent
natural experiment
craftsmanship
JEL: 
I28
I39
J24
L51
Document Type: 
Working Paper

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