Job Market Signaling through Occupational Licensing

Abstract Among men, the black-white wage gap is as large today it was in 1950. We test whether due to asymmetric information using newly collected data on occupational licensing laws that ban workers with criminal records. find evidence supporting this hypothesis. The premiums for black men are largest licensed occupations restrict felons—particularly states Ban-the-Box and at small firms. In these contexts where a worker's history difficult infer, we reduces racial gap.