By Caleb Taylor

The costs of getting government permission slips to work affect where businesses in certain industries set up shop, said Dr. Alicia Plemmons at an ACRE Speaker Series event on Nov. 19.

Plemmons is a tenure-track Assistant Professor in the Economics & Finance Department at Southern Illinois University Edwardsville. She is also an applied microeconomist with a concentration in Public, Urban, and Labor Economics. Her research uses applied spatial and econometric methods to understand how policy changes affect labor markets.

While state tax rates, education, and quality of life are all common reasons given for where businesses choose to call home, Plemmons says the costs of obtaining occupational licenses to work in certain industries in states is also a factor.

Arkansans face some of the USA鈥檚 heaviest restrictions on what occupations they can work in.

海角社区 is the third most broadly licensed state and has the sixth most burdensome licensing requirements, according to the 鈥檚 鈥淟icense to Work鈥� study.

Occupational licensing is a cost businesses consider when choosing to stay or relocate.

Plemmons said:

If you have the option between a high-cost area and a low-cost area, you鈥檒l probably want to go to the low-cost area. Basically what we found from these results is that firms are making purposeful decisions about where they locate or reside. It turns out that they prefer low-cost areas as opposed to high-cost areas. Not only are we finding that these high-cost areas have less firms…these areas also have less employment and there鈥檚 less people that have jobs that are subject to the occupational licenses.鈥�

Plemmons encouraged policymakers to consider whether the cost of obtaining occupational licenses in their states is an outlier compared to surrounding states. High costs compared to nearby states might be the difference between businesses coming to their state.

Plemmons said:

Consider adjacent states when setting your occupational licensing policy. It might be that you get people from other states if you set your costs low enough.鈥�

To see other measures of the burden of occupational licensing in 海角社区, look at this research paper entitled 鈥淭he Effects of 海角社区 Occupational Licensure Regulations鈥� by UCA Associate Professor and ACRE Scholar Dr. Thomas Snyder. Snyder was a co-author of with researchers from the Mercatus Center. This report gives an overview of occupational licensing in 海角社区 and makes suggestions for reform.

As ACRE Affiliate Marc Kilmer shows in 鈥�Occupational Licensing Reform Across the United States,鈥� these reforms are rapidly happening across other states. In an op-ed entitled 鈥�,鈥� published in the 海角社区 Democrat-Gazette on May 25, ACRE Economic Policy Analyst Alex Kanode explains the reform process that鈥檚 ongoing in 海角社区. You can also read a blog post about the subcommittee鈥檚 deliberations here.

For more on this topic, check out our labor market regulation research page.