Are Occupational Licensing Restrictions Binding for Undocumented Immigrants? Evidence from California

Undocumented immigrants face substantial legal barriers to employment in the United States. Besides work authorization, federal law prevents states from issuing occupational and professional licenses to undocumented immigrants, potentially hampering their occupational mobility. Using a recent policy change that granted undocumented immigrants access to licenses in California, I estimate the effect of these restrictions on immigrant labor market outcomes. First, I find that licensing reform increased access to licenses: after 2016, licensing grew more quickly among workers with Hispanic names than other groups, and self-reported licensing increased 2 percentage points among imputed undocumented workers relative to other groups. Next, I find positive labor market effects on undocumented workers: comparing California to other states, undocumented immigrant wages and employment increase more in more heavily licensed occupations after the reform. These results suggest that licensing restrictions are a meaningful barrier to employment for undocumented immigrants.