Econ Neglects Licensing

Labor economics is economists studying work and employment.  The latest Econ Journal Watch has an article suggesting distorted priorities in labor econ texts.  In the U.S. now, less than 3% of workers earn the minimum wage, about 12% are in unions, and about 29% are required to hold a state-issued license to do their work.  But here are the priorities of “five undergraduate labor economics textbooks currently in print. … All but one have been published in four or more editions”:


Here is my relevant theory paper, here are some sample licensed jobs,


and here are more informative quotes from the EJW article:

Kleiner and Krueger (2008) find that licensing is associated with a 15 percent wage premium. … Pfeffer (1974) who finds a negative relationship between the ease of licensing and income of accountants, attorneys, barbers, dentists, and pharmacists, though he finds no such correlation for real estate agents. Similarly, Kleiner and Kudrle (2000) find that tougher licensing requirements for dentists raise practitioners’ incomes. Timmons and Thornton (2008a) conclude that radiologic technologists in states with licensing earn as much as much as 6.9 percent more than those working in states without licensing; Timmons and Thornton (2008b, 141) find that “certain licensing provisions may have increased the earnings of barbers by as much as 26 percent.” …

Examining the real estate market, Johnson and Loucks (1986) conclude that licensing regulations result in better service for consumers. In contrast, Carroll and Gaston (1981, 973) report that “consistently from occupation to occupation [among the seven they studied] there existed a strong negative association between per capita numbers of an occupation and measures of per capita quality of service received” … Kleiner and Todd’s (2007) … [show] tighter state bonding/net worth requirements for mortgage brokers is associated with higher foreclosure rates and a greater percentage of high interest mortgages. … Kleiner and Kudrle (2000) study the dental health of air Force recruits and find recruits from states with more stringent dentist licensing standards do not have better dental health than recruits from states with lower standards. Similarly, Skarbek (2008, 71) analyzes Florida’s relaxation of restrictions on construction contractors in the wake of Hurricanes Frances and Katrina and finds “little evidence of significant detrimental effects from the policy change” … Paul (1984) finds no evidence that states licensing physicians experienced higher quality care as measured by mortality rates. 

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