Effects of Occupational Licensing and Unions on Labour Market Earnings in Canada

Using longitudinal data from the Canadian Survey of Labour and Income Dynamics from 1999 to 2011, the article compares the pay and benefits of licensed and unionized workers. In a cross section of respondents and using ordinary least squares estimates, it finds a pay premium of 0.155 log points for those with an occupational licence compared to those without one; the comparable union wage premium is slightly more than half, that is 0.085 log points. Fixed‐effects estimates go in the opposite direction (0.028 and 0.046 log points for licensing and unionization, respectively), suggesting the existence of unobservable factors correlated with licensing and union status. Unionized workers are more likely to access standard benefits, such as medical insurance and pension plans, but licensed workers benefit little from their licensing status in access to benefits. Finally, union workers are significantly less likely to receive incentive pay, such as profit sharing, while the association between occupational licensing and incentive pay is close to zero and statistically insignificant.