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Measuring prevalence and labour market impacts of occupational regulation in the EU

Measuring prevalence and labour market impacts of occupational regulation in the EU
Published on: 16/01/2017
The European Commission contracted an independent study to assess the prevalence and labour market impacts of occupational regulation in the EU, using the recent European Survey on Regulated Occupations. The aim was to reinforce the evidence base on the economic costs and benefits of occupational regulation.

This study was carried out to support the mutual evaluation process. It underpins the follow-up actions on regulated professions presented in the Single Market Strategy with empirical evidence, and is also relevant in the context of the Services Package adopted today.

Overview

Occupational licensing affects about 22% of workers in the EU, although this prevalence varies across Europe, with a higher incidence in central Europe. It is associated with an aggregate wage premium of about 4%, but considerable variations by occupation are found. Estimates suggest that licensing can be associated with a substantial loss in employment (up to 700,000 jobs in the EU). Depending on the occupation, there could be between 3-9% more people working in a given profession should access requirements be made less stringent. 

Another striking fact is that, under licensing, about 1/3 less foreign-born workers are found in the occupation. Conversely it was found that the automatic recognition arrangements currently present in the EU are effective in facilitating entry into foreign markets and mobility across countries.  

The study shows that licensing is not the only way to encourage workers to invest in training. Also, licensing appears to reduce the number of people that return to education for those with low educational attainment while it increases the number for university degree holders.

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