Occupational Licenses and Labor Market Outcomes

Author Name MORIKAWA Masayuki (Vice Chairman & Vice President, RIETI)
Creation Date/NO. February 2017 17-J-009
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This study, using an original survey data of individuals, presents new empirical evidence on the relationship between occupational licenses and labor market outcomes. The novelty of this study is its distinction between the possession and actual use of licenses as well as the distinction between certifications and monopolistic licenses. Occupational licenses have a large impact on the function of the labor market in Japan. The majority of respondents holds certifications or licenses, and nearly 40% of the respondents use either one in their current jobs. The use of certifications and licenses is particularly prevalent in the service sector such as health care and education industries. The possession of occupational license has positive impacts on the labor market attachment and wages of female and elderly people. On the other hand, occupational licensing may negatively affect market efficiency through its creation of monopoly rents. In considering the importance of occupational licenses under the trend toward the service economy, it is desirable to include questionnaires on the possession and the use of occupational licenses in statistical surveys periodically.

The English version of this paper is 17-E-078.