| Abstract: | This article provides evidence of a correlation between licensing exam difficulty and salaries in a regulated profession. Exam difficulty is positively correlated with salaries across states and over time, both at the aggregate and individual state levels. The magnitude of this correlation is substantial: a 1 per cent increase in exam difficulty implies a 1.7 per cent increase in median entry‐level salaries. Exam difficulty does not significantly affect the inter‐quartile difference in salaries. |
