Peter Blair
Bobby Chung

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

Publication Type
Working Paper
File Description
Third version, November 2022
JEL Codes
D82: Asymmetric and Private Information; Mechanism Design
J15: Economics of Minorities, Races, and Immigrants; Non-labor Discrimination
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
J31: Wage Level and Structure; Wage Differentials
J44: Professional Labor Markets; Occupational Licensing
J70: Labor Discrimination: General
K23: Regulated Industries and Administrative Law
K31: Labor Law
L51: Economics of Regulation
wage inequality
statistical discrimination
asymmetric information