(Scientific Storytelling) for help with the manuscript. All remaining errors are ours. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

We exploit state variation in licensing laws to study the effect of licensing on occupational choice using a boundary discontinuity design. We find that licensing reduces equilibrium labour supply by an average of 17-27 per cent.

Among men, the black-white wage gap is as large today as it was in 1950. We test whether the black-white wage gap is due to asymmetric information using newly collected data on occupational licensing laws that ban workers with criminal records. We find evidence supporting this hypothesis. The licensing premiums for black men are largest in licensed occupations that restrict felons—particularly in states with Banthe-Box laws and at small firms. In these contexts where a worker's criminal history is difficult to infer, we find that occupational licensing reduces asymmetric information and reduces the racial wage gap.

We develop a model of statistical discrimination in occupational licensing with endogenous occupation selection and wage determination. We find a unique equilibrium with sharp comparative statics. Our key theoretical result is that the licensing premium is higher for workers who are members of demographic groups that face a higher cost of licensing. The predictions of the model can explain, for example, the empirical finding in the literature that occupational licenses that preclude felons close the racial wage gap among men by conferring a higher premium to Black men than to White men (Blair and Chung 2018).

This paper contributes to the discussion on childhood exposure by investigating the extent to which the educational background of peers' parents is related to a child's future college attainment. I analyze the friendship networks of a nationally representative sample of high-school students in the US and find that the spillover from peers' parents of the same gender operates independently of peer effects. The effects are robust to addressing friendship selection. The same gender pattern suggests either the transmission of gender-specific information or the presence of a role model effect. Furthermore, the same gender spillover is significant only for students from lower-educated families. A student whose father is absent or less caring also experiences significant influence from peers' fathers. The heterogeneity by own family background indicates the influences from parental and non-parental adults are substitutes.