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A review of occupational regulation and its impact

ER 40 - occupational regulationOccupational regulation has been sorely under researched, particularly in the UK and Europe. This research, conducted by the National Institute of Economic and Social Research, provides us with greater understanding. It introduces a sophisticated conceptual definition of occupational regulation; maps its different forms in the UK; and produces estimates on its prevalence and impact. The report also provides a discussion on the economic theory of occupational regulation and presents existing evidence on its nature and impact from the UK and further afield.

A review of occupational regulation and its impact (PDF, 1.9 Mb)  - Evidence report 40
Published October 2011

This Evidence Report develops a deeper understanding of the nature and impact of occupational regulation in the UK. The term, occupational regulation, is a broad heading for various mechanisms (including licence to practice and voluntary forms) through which minimum skill standards are applied within occupations. As such, occupational regulation is one of a range of levers, or best market solutions, which are designed to encourage employers to train on a collective basis.

The use of occupational regulation as a mechanism for increasing the demand for, and supply of, skills was considered alongside other measures, as part of the UK Commission for Employment and Skills’ Review of Employer Collective Measures. However, that Review acknowledged the general topic of occupational regulation was under researched in the UK. This research, conducted by the National Institute of Economic and Social Research, helps to address this and deepens our knowledge of the area by:

  • providing a discussion on the existing theory on occupational regulation by examining existing economic literature;
  • providing a detailed review of the existing evidence on occupational regulation in the UK, America, Canada and Europe (Germany, France and Italy), again via existing literature;
  • providing a comprehensive map of occupational regulation in the UK, through the mapping of managerial, professional and non-professional occupations at the Unit Group level of the Standard Occupational Classification (2000);
  • producing estimates of the labour market impact of occupational regulation in the UK. Its prevalence is estimated by comparing the mapping output with Unit Group data obtained from the Quarterly Labour Force Survey (QLFS). Further analysis, via cross-sectional analysis, produces estimates on levels of qualifications, wages and rates of job-related training between workers in regulated and unregulated occupations. This uses QLFS 2010 data. And a Difference-in-Differences analysis is employed to evaluate the impact of switches in regulation status on skill levels, job-related education and training, wages and employment. This uses QLFS data between 2001 and 2010.
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