Occupational Licensing in the Digital Economy

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Abstract

We study the impact of occupational licensing restrictions on market clearing in the digital economy. Our administrative data of 20 million transactions captures real-time supply and demand on a large online marketplace in the $500B home services industry. Using a boundary discontinuity research design that exploits variation in occupational licensing laws across state borders, and a case study based on a difference-in-differences research design that exploits a change in licensing regime within a state, we find that occupational licensing regulations increase the likelihood of a supply-demand imbalance by 14 percentage points or 24 percent.

Email us at digitalinitiative@hbs.edu for information on attending this seminar.

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