Occupational licenses and labor market outcomes in Japan

Abstract

This study, using original survey data, documents the relationship between occupational licenses and labor market outcomes in Japan. The novelty of this study is that it distinguishes between the possession and actual use of occupational credentials, as well as between stringent licenses and lenient certifications. Occupational licenses and certifications have a large presence in the Japanese labor market. The possession of occupational credentials, particularly licenses, has positive associations with the labor market attachment and wages of individuals. On the other hand, the occupational licensing system might negatively affect market efficiency through the creation of monopoly rents.