The License Raj

Via marginalrevolution I found this article about a new book that examines the usefulness of occupational licenses. The gist:

The usual rationale for occupational licensing is that it helps protect the public from unqualified providers. When it comes to matters of life and death, like jobs in the medical fields, this rationale is on stronger ground than when it comes to a manicure or a shampoo.

Several studies have examined the effect of license requirements on performance in occupations like dentists and teachers. In one study, Professor Kleiner and a colleague, Robert T. Kudrle, found that stricter state licensing requirements for dentists did not noticeably affect the dental health of 464 Air Force recruits. Other studies have found at best weak evidence that students in classes taught by licensed teachers performed better than those taught by unlicensed teachers.

Summarizing the literature, Professor Kleiner concludes, "there is little to show that occupational regulation has a major effect on the quality of service received by consumers."

At the same time, the hurdles imposed by occupational licensing reduce the supply of workers in many regulated professions, which drives up wages in those jobs and the price of services. Dentists, for example, were found to earn and charge 11 percent more in states with the most restrictive licensing requirements. While tough licensing standards may help higher-income consumers avoid low-quality providers, it also appears to prevent lower-income consumers from gaining access to some services.

This reminded me of a John Stossel column I read last year about regulating cornrows that's worth a quick skim.

And if you don't understand the title of the blog post, read this.