Do Immigrants Gain from Occupational Licensing? A Cross-Cohort Analysis

Abstract

This study examines the likelihood for immigrants in different cohorts of getting occupational licenses and the impacts of licensing on the labor market. It does this by using two sources of data: The Current Population Survey and the Survey of Income and Program Participation. Consistent with previous research, we found that immigrants, especially new and high-skilled immigrants, are less likely to get licenses. The longer immigrants stay in the U.S. after migration, the higher the possibility of getting a license. Immigrants gain significantly lower wages than similar natives in all cohorts, but new immigrants perform better in the labor market because they are more educated and highly skilled. Overall, there is a significantly positive licensing wage premium for immigrants. However, this paper presents new findings that this wage premium is not shown among new immigrants who are primarily from developing regions. Only immigrants from English-speaking regions or European countries could enjoy wage premiums through licensing. In contrast, immigrants from other countries get no, or even negative, wage premium through licensing. Moreover, the ability for an immigrant to speak English provides higher wages, but this positive effect gradually disappears during more years in the host country since migration. Finally, acquiring certain licenses, such as cosmetology, is not a successful labor investment for immigrants.