Is Occupational Licensing a Barrier to Interstate Migration?

Occupational licensure has become one of the most significant labor market regulations in the United States that also may restrict the interstate movement of workers. We analyze the interstate migration of twenty-two licensed occupations. Using an empirical strategy that controls for unobservable characteristics that drive long-distance moves, we find that individuals in occupations with state-specific licensing exam requirements move at a 36 percent lower rate between states relative to members of other occupations. Members of licensed occupations with national licensing exams show no evidence of limited interstate migration. The size of this effect varies across occupations, and appears tied to the state-specificity of licensing requirements. We also provide evidence that adoption of reciprocity agreements, which lower re-licensure costs, increase interstate migration of lawyers. Based on our results, we estimate that the rise in occupational licensing can explain part of the documented decline in interstate migration and job transitions in the U.S.