Anti-competitive and regulatory barriers in the United States labour market
Occupational licensing and non-competition agreements are two important types of labour
market regulation in the United States, both covering around one fifth of all workers.
While some regulation is needed to protect safety and ensure quality of services,
it also creates entry barriers and reduces competition with important costs for job
mobility, earnings and productivity growth. Employment opportunities for low-skilled
workers and disadvantaged groups tend to be particularly affected by these barriers.
The States are mainly responsible for labour market regulation and the variation across
States is similar to the variation in the European Union. Harmonising requirements
and scaling back occupational licensing as well as restricting the use of non-competition
covenants could help to circumvent the secular decline in dynamism. However, attempts
to reform often face stiff opposition from associations of professionals. The federal
government has limited influence, but can in some cases help by shifting the burden
from workers to meet regulatory requirements onto States and employers to show that
high and differing regulatory standards are needed.
Published on October 21, 2020