The Racial Impact of Professional Licensing

Jeffrey Miron

In many high-paying occupations, the proportion of racial and ethnic minorities is below their percentage in the population (see, for example, these data on physicians, lawyers, and architects). 

One possible reason is ongoing discrimination against these groups, or the impact of lower income, which might itself reflect prior discrimination.

Cato Research Brief no. 393, however, suggests that government licensing contributes to these racial disparities: 

Our research investigates the 150-hour rule for certified public accountant (CPA) licensure, which requires the equivalent of a fifth year of higher education. Our results suggest that the rule reduced overall entry into the CPA profession, but it caused minority entry to fall 13 percent more than nonminority entry and did not improve the quality of CPAs. 

Yet again, licensing fails to generate its alleged benefits while creating significant adverse consequences.

Lemoni Matsumoto, an undergraduate at the University of Chicago, contributed to this article.