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UNITED STATES DEPARTMENT OF LABOR

Beyond Traditional Academic Degrees: The Labor Market Returns to Occupational Credentials in the United States (Baird et al., 2021)

Review Guidelines

Causal Evidence Guidelines

There is no conflict of interest.

Citation

Baird, M. D., Bozick, R., & Zaber, M. A. (2021). Beyond Traditional Academic Degrees: The Labor Market Returns to Occupational Credentials in the United States. RAND.

Highlights

  • The study's objective was to examine the impact of obtaining an occupational credential through licensing or certification, on employment and earnings outcomes.
  • The study used an instrumental variable (IV) design to estimate the impact of occupational credentials using data from the Current Population Survey (CPS). The authors used statistical models to compare differences in outcomes between individuals with occupational credentials and those without credentials.
  • The study found a significant increase in employment and wages among workers with either a license or certificate.
  • This study receives a moderate evidence rating. This means we are somewhat confident that the estimated effects are attributable to occupational credentials, but other factors might also have contributed.

This page has been updated to comply with Executive Order 14168.

Features of the Study

The study investigated the effects of occupational credentials, such as licenses and certifications, on employment and earnings using an instrumental variable design. It used individual-level data from the Current Population Survey (CPS) for the years 2015 to 2016, focusing on how obtaining these credentials influences employment probabilities and changes in hourly wages. To address potential biases in enrollment in credential programs, the researchers employed “local peer influence” as an instrumental variable. This approach assumes that individuals in areas with a higher concentration of credential-holding peers are more likely to pursue similar qualifications. Peers were defined based on shared characteristics such as race/ethnicity, sex, and education level, within a specific age range and geographic area. The study's sample included U.S. residents aged 18-65 who were not enrolled in school. The treatment condition was based on responses from the CPS regarding the possession of professional certificates or industry licenses. Statistical models were used to compare employment and wage outcomes between individuals with and without credentials, controlling for various factors including demographics, local economic conditions, and peer group characteristics.

Findings

Employment

  • The study found a significant increase in employment for both certification and licensing among individuals with sub-baccalaureate degrees. The study also found a significant increase of 4% in the probability of employment among the licensed workers who have bachelor’s degrees and higher. However, certification did not yield a statistically significant effect among workers with bachelor’s or higher education.

Earnings and wages

  • The study found a statistically significant increase in hourly earnings among sub-baccalaureate workers, however, no statistically significant effect of credentials on earnings was observed for workers with bachelor’s degrees and higher education.

Causal Evidence Rating

The quality of causal evidence presented in this report is moderate because it was based on a well-implemented nonexperimental designed. This means we are somewhat confident that any estimated effects are attributable to occupational credentials, but other factors might also have contributed.

Reviewed by CLEAR

June 2026