short abstract: 

We empirically study a labor market in which a districtspecific entry (licensing) examination is coupled with labor mobility acrossdistricts. Our analysis exploits a change in the grading procedure of theexam, from grading in the local district to grading in a randomly assigned differentdistrict. We document that licensing regulation leads to extreme heterogeneity in admissionoutcomes, unfair admission procedures, and inefficient mobility of workers.