Labor market impacts of state-level occupational licensing of undocumented immigrants

Abstract

Since 2015, several U.S. states have begun granting professional or occupational licenses to recipients of the Deferred Action for Childhood Arrivals (DACA) program. In this study, we examine the differences in the issuance of such licenses at the state level to estimate their effect on the labor market outcomes of DACA recipients. Using data from the Current Population Survey spanning the period from 2012 to 2020, we find that granting access to occupational licensing has had a significant positive impact on the wages of DACA recipients, raising them by 12.5 percent. We also observe that this wage premium is greater for male recipients than for female ones. Furthermore, we find that the wage premium and increased hours of work resulting from access to licenses are most pronounced for recipients over 24 years of age who have completed their formal education and have already established their careers. These findings suggest that access to occupational licenses can improve the labor market outcomes of Dreamers. Therefore, expanding access to public benefits, such as licensing, can substantially benefit DACA recipients in states where such access has been broadened.