What a License Is Actually Worth: New Cross-Country Research on the Trade-License Wage Premium

Every apprentice eventually asks some version of the same question. Is the license worth the classes, the exam, the fees, the wait? A new working paper takes a swing at the trade-license wage premium with more data than the field has usually had, harmonizing worker surveys across 44 countries. The short answer: licensed workers earn roughly 6 to 19% more than comparable unlicensed workers, depending on how you slice the numbers.

The paper comes from Jonathan Hartley and Morris Kleiner, circulated as an NBER working paper. Kleiner's name matters here. He's spent his career as the leading economist studying occupational licensing, so when he puts a cross-country number on the wage effect, it's worth reading closely.

That 6-to-19% spread isn't hedging for its own sake. It's what happens when you run the same question through different statistical specifications. The premium survives across those models, which is the point. Even at the low end, a licensed tech is measurably ahead of an otherwise-similar unlicensed one. At the high end, the gap is a fifth of your pay.

Putting a Number on the Trade-License Wage Premium

For the licensed trades, HVAC, electrical, plumbing, this is the closest thing to a clean answer we've had on a perennial argument. A license costs time and money up front. The research says it buys a durable wage premium on the other side, and not a trivial one.

A couple of caveats keep this honest. This is a working paper, not a peer-reviewed publication. It's been circulated for discussion and revision, which means the numbers are strong preliminary evidence rather than a final verdict. And the premium is an average across many occupations and countries; your local market, your specialty, and your reputation still drive what you personally clear.

The paper also maps how much licensing varies around the world, and the spread is enormous. Licensing covers about 14% of workers in Denmark at the low end and more than 40% in India and South Africa at the high end. Same idea, wildly different reach depending on where you stand.

The Deregulation Debate, With Data Attached

Licensing has critics, and this paper hands them some ammunition too. Across the 44 countries, higher licensing prevalence is negatively associated with GDP per capita and governance quality, and positively associated with informal employment. Places with heavier licensing tend to be poorer, worse-governed, and to have more off-the-books work.

Read that carefully. It's a cross-country correlation, not proof that licensing causes weak growth or pushes people into informal work. Causation could run the other way, or a third factor could drive both. The authors are describing a pattern, and the honest framing is that it complicates the "more licensing is always good" story without settling the fight.

For a working tech, the two findings aren't in tension. On the individual level, holding the license pays. On the national level, blanket licensing correlates with worse outcomes. Both can be true, and both should inform how you argue when your state debates loosening or tightening the rules.

There's a labor-market angle that makes this timely. With the trades short on qualified people, some states are eyeing lighter credential requirements to widen the pipeline, exactly the tension we covered in the 2026 technician workforce shortage. This research says the individual worker has a real financial stake in how that plays out. And if you're the one actually chasing the credential, our rundown of appliance repair licensing and insurance in California walks through what the paperwork side looks like on the ground.

The number to carry out of this: somewhere between 6 and 19%. That's what the best current cross-country evidence says a license adds to a comparable worker's pay. It's preliminary, it's an average, and it's still the strongest reason yet to finish what you started.

Sources

Hartley, J.S., Kleiner, M.M. (2026). "Analyzing Occupational Licensing Across Nations." NBER Working Paper No. 35424. https://www.nber.org/papers/w35424