Appendix C: Research on Occupational Licensing

The Inverted Pyramid: 10 Less Restrictive Alternatives to Occupational Licensing

When it comes to occupational regulation, policymakers may see their options as action or inaction: licensing or no licensing. In fact, policymakers can choose from a plethora of alternatives that provide the purported benefits of licensing, without the downsides. This paper discusses 10 less restrictive alternatives to licensing that can protect consumers as well as or better than licensing, without shutting people out of work. It makes the case that before imposing, or continuing to impose, any occupational regulation, policymakers should demand systematic, empirical evidence of harm—and then select the least restrictive and most appropriate option to provide the desired consumer protections.

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Carpenter, D. M. (2012). Testing the utility of licensing: Evidence from a field experiment on occupational regulation. Journal of Applied Business and Economics, 13(2), 28–41. http://www.na-businesspress.com/JABE/CarpenterDM_Web13_2_.pdf

Carpenter, D. M., & McGrath, L. (2014). The balance between public protection and the right to earn a living [Resource brief]. Lexington, KY: Council on Licensure, Enforcement and Regulation. http://ij.org/report/the-balance-between-public-protection-and-the-right-to-earn-a-living/

Department of the Treasury Office of Economic Policy, Council of Economic Advisers, & Department of Labor. (2015). Occupational licensing: A framework for policymakers. Washington, DC: White House. https://obamawhitehouse.archives.gov/sites/default/files/docs/licensing_report_final_nonembargo.pdf

Erickson, A. C. (2013). White out: How dental industry insiders thwart competition from teeth-whitening entrepreneurs. Arlington, VA: Institute for Justice. http://ij.org/report/white-out/

Erickson, A. C. (2016a). Barriers to braiding: How job-killing licensing laws tangle natural hair care in needless red tape. Arlington, VA: Institute for Justice. http://ij.org/report/barriers-to-braiding/

Erickson, A. C. (2016b). Putting licensing to the test: How licenses for tour guides fail consumers—and guides. Arlington, VA: Institute for Justice. http://ij.org/report/putting-licensing-test/

Fetsch, E. (2016). No bars: Unlocking the economic power of the formerly incarcerated. Kansas City, MO: Ewing Marion Kauffman Foundation. http://www.kauffman.org/~/media/kauffman_org/microsites/mayors2016/occupational%20licensing%20and%20the%20formerly%20incarcerated_final.pdf

Flanders, W., & Roth, C. (2017). Fencing out opportunity: The effect of licensing regulations on employment. Milwaukee, WI: Wisconsin Institute for Law and Liberty. http://www.will-law.org/wp-content/uploads/2017/03/FOO2-FINAL-v3.pdf

Fontinelle, A., Mitchell, D., & Snyder, T. (2016). Unnatural rights in the natural state: Occupational licensing in Arkansas. Conway, AR: Arkansas Center for Research in Economics, University of Central Arkansas. http://uca.edu/acre/files/2014/07/ACRE_OccupationalLicensing_InteractiveWeb.pdf

Gius, M. (2016). Waiting to work: The effects of occupational licensing on wages and employment. Hartford, CT: Yankee Institute for Public Policy. http://www.yankeeinstitute.org/wp-content/uploads/2016/11/16-312-YI_CCW_OccupationalLicensing_Study_web-1.pdf

Hall, J. C., & Pokharel, S. B. (2016). Barber licensure and the supply of barber shops: Evidence from U.S. states. Cato Journal, 36(3), 647–657.

Hemphill, T. A., & Carpenter, D. M. (2016). Occupations: A hierarchy of regulatory options. Regulation, 39(3), 20–24. https://object.cato.org/sites/cato.org/files/serials/files/regulation/2016/9/regulation-v39n3-5_0.pdf

Indiana Professional Licensing Agency. (2014). SEA 421 Report: Establishing a process for self-certification registration: A playbook for future occupational regulation in Indiana. Indianapolis, IN. https://www.in.gov/pla/files/IPLA_Legislative_Report_-_Self-Certification_Registration.pdf

Johnson, E., Aggarwal, S., Bezjak, S, Butitova, D., Islam, M. M., & Poudel, H. (2016). Occupational licensing and women entrepreneurs in Missouri: A report to the Women’s Foundation (IPP Research Report). The Women’s Foundation. https://static1.squarespace.com/static/545815dce4b0d75692c341a8/t/582b2125e4fcb54bebfd651e/1479221544420/OL+and+Women+Entrepreneurs+in+MO+-+Final+11.14.16.pdf

Kleiner, M. M. (2015a). Guild-ridden labor markets: The curious case of occupational licensing. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. http://research.upjohn.org/cgi/viewcontent.cgi?article=1254&context=up_press

Kleiner, M. M. (2015b). Reforming occupational licensing policies (Discussion Paper 2015-01). Washington, DC: The Hamilton Project, Brookings Institution. https://www.brookings.edu/wp-content/uploads/2016/06/THP_KleinerDiscPaper_final.pdf

Kleiner, M. M., & Vorotnikov, E. (2017). Analyzing occupational licensing among the states. Journal of Regulatory Economics. https://link.springer.com/article/10.1007/s11149-017-9333-y

Kleiner, M. M., Marier, A., Park, K. W., & Wing, C. (2016). Relaxing occupational licensing requirements: Analyzing wages and prices for a medical service. Journal of Law and Economics, 59(2), 261–291.

Laird, M., Moore, A., & Staley, S. (2016). Occupational licensing in Florida: Unnecessary licenses are killing jobs (Policy Brief No. 131). Los Angeles, CA: Reason Foundation. http://reason.org/files/occupational_licensing_florida.pdf

Little Hoover Commission. (2016). Jobs for Californians: Strategies to ease occupational licensing barriers (Report #234). Sacramento, CA. http://www.lhc.ca.gov/sites/lhc.ca.gov/files/Reports/234/Report234.pdf

Meehan, B., & Benson, B. L. (2015). The occupations of regulators influence occupational regulation: Evidence from the US private security industry. Public Choice, 162(1), 97–117.

Mellor, W., & Carpenter, D. M. (2016). Bottleneckers: Gaming the government for power and private profit. New York, NY: Encounter Books.

Nunn, R. (2016). Occupational licensing and American workers. Washington, DC: The Hamilton Project, Brookings Institution. https://www.brookings.edu/wp-content/uploads/2016/07/occupational_licensing_and_the_american_worker.pdf

Pizzola, B., & Tabarrok, A. (2017). Occupational licensing causes a wage premium: Evidence from a natural experiment in Colorado’s funeral services industry. International Review of Law and Economics, 50, 50–59.

Rodriguez, M. N., & Avery, B. (2016). Unlicensed and untapped: Removing barriers to state occupational licenses for people with records. New York, NY: National Employment Law Project. http://nelp.org/content/uploads/Unlicensed-Untapped-Removing-Barriers-State-Occupational-Licenses.pdf

Roth, C., & Ramlow, E. (2016). Fencing out opportunity: Occupational licensing in the Badger State. Milwaukee, WI: Wisconsin Institute for Law and Liberty. http://www.will-law.org/wp-content/uploads/2016/11/Licensure-FINAL.pdf

Skorup, J. (2017). This isn’t working: How Michigan’s licensing laws hurt workers and consumers. Midland, MI: Mackinac Center for Public Policy. https://www.mackinac.org/archives/2017/s2017-02.pdf

Slivinski, S. (2015). Bootstraps tangled in red tape: How state occupational licensing hinders low-income entrepreneurship (Policy Report No. 272). Phoenix, AZ: Goldwater Institute. https://goldwater-media.s3.amazonaws.com/cms_page_media/2015/4/15/OccLicensingKauffman.pdf

Slivinski, S. (2016). Turning shackles into bootstraps: Why occupational licensing reform is the missing piece of criminal justice reform (Policy Report No. 2016-01). Tempe, AZ: Center for the Study of Economic Liberty, Arizona State University. https://research.wpcarey.asu.edu/economic-liberty/wp-content/uploads/2016/11/CSEL-Policy-Report-2016-01-Turning-Shackles-into-Bootstraps.pdf

Smith, D. J. (2014). Reforming occupational licensing in Alabama. Troy, AL: Manuel H. Johnson Center for Political Economy, Troy University. https://nebula.wsimg.com/f298ad4627c3d5c72150a568437623a8?AccessKeyId=F0B126F45D4E1A4094F7&disposition=0&alloworigin=1

Snyder, T. J. (2016). The effects of Arkansas’ occupational licensure regulations. Conway, AR: Arkansas Center for Research in Economics, University of Central Arkansas. http://uca.edu/acre/files/2016/06/The-Effects-of-Arkansas-Occupational-Licensure-Regulations-by-Dr.-Thomas-Snyder.pdf

Svorny, S. V. (2015). Asymmetric information and medical licensure. Cato Unbound. https://www.cato-unbound.org/2015/04/10/shirley-v-svorny/asymmetric-information-medical-licensure

Tabarrok, A., & Cowen, T. (2015). The end of asymmetric information. Cato Unbound. https://www.cato-unbound.org/2015/04/06/alex-tabarrok-tyler-cowen/end-asymmetric-information

Thierer, A., Koopman, C., Hobson, A., & Kuiper, C. (2015). How the internet, the sharing economy, and reputational feedback mechanisms solve the “lemons problem” (Mercatus Working Paper). Arlington, VA: Mercatus Center, George Mason University. https://www.mercatus.org/system/files/Thierer-Lemons-Problem.pdf

Timmons, E. J., & Mills, A. (2015). Bringing the effects of occupational licensing into focus: Optician licensing in the United States (Mercatus Working Paper). Arlington, VA: Mercatus Center, George Mason  University. https://www.mercatus.org/system/files/Timmons-OpticianLicensing.pdf

Go Back: Appendix B: Explanation of Specific Occupations