Occupational Licensing—Between Professional Closure and Labour Market Integration

In many European countries, immigrants are not well integrated into the labour market. Barriers to entry, for example through occupational licenses, might even further complicate the professional integration of immigrants. Our project analyses how job entry restrictions affect professional careers in general and the career prospects of immigrants in particular. In this context, we study a reform of the German Trade and Crafts Code (Handwerksordnung) that came into effect in 2004. The reform reduced the number of trades in which a master craftsmen’s diploma was a prerequisite for setting up a business from 94 to 41. In the other 53 trades, a master craftsmen’s diploma is optional. For the analysis, we will use a difference-in-difference combined with a propensity score matching estimation to compare the development of careers and incomes in trades that were liberalized in 2004 to similar trades in which entry barriers remained in place even after 2004.