The effect of occupational licensing deregulation on migrants in the German skilled crafts sector

Occupational licensing on the national level reduces labor market prospects of individuals with a low likelihood of fulfilling the licensing requirements. Such regulation has the potential to adversely affect the labor market integration of foreign-born citizens and can be an obstacle to the free movement of labor toward its most productive uses. Before the backdrop of increased levels of migration into Germany, and the discussion about harmonizing labor standards in Europe, this paper empirically examines the effects of the deregulation of occupational licensing in the German crafts sector on the proportion of migrants working in this sector. The results suggest that the deregulation has increased the proportion of migrants among self-employed as well as employed craftsmen in the fully deregulated trades.