The purpose of this paper is to examine the labor market entry of real estate agents in the USA and the potential effect of occupational licensing on entry.
Data from the 2012 to 2017 American Community Survey are linked to local housing price fluctuations from the Federal Housing Finance Agency for 100 large metro areas. The cost of entry associated with occupational licensing for new real estate agents is carefully measured for each market and interacted with housing fluctuations to investigate the role for barriers to entry.
A 10 percent increase in housing prices is associated with a 4 percent increase in the number of agents. However, increased license stringency reduces the labor market response by 30 percent. The impact of licensing is stronger for women and younger workers.
This work contributes to the growing literature investigating the impact of occupational licensing on labor supply and entry in the USA, as well as potential impacts of regulation on dynamism and entrepreneurship. To the authors’ knowledge, this study is also the first to quantify the cost of occupational licensing in the real estate industry.
