occupational licensing

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Is a labour market institution that requires those practising an occupation to be licensed by an appropriate authority, often a state agency. In the USA, doctors were the first to be licensed—in the state of Virginia in 1649—but similar regulations now govern entry into hundreds of occupations and more than a fifth of the US workforce has a licence to practice. To secure a licence, occupational practitioners typically have to prove competence, perhaps by passing examinations and demonstrating they have updated skills through undergoing continuous professional development. Licensing may also govern other features of the occupation, such as its schedule of fees and methods of practice. Licensing can benefit practitioners by restricting access to an occupation and so reducing competition and raising wages. Consumers and the general public may benefit as well, however, by enforcing high standards of expertise and good occupational practice. It has been pointed out that in the USA the percentage of the workforce that is licensed is considerably greater than the percentage who are members of trade unions.

Subjects: Human Resource Management.

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