Wednesday, May 13, 2009
According to the Council of State Governments (CLEAR 2004), more than 800 occupations are subject to licensing requirements in at least one state. it is, therefore, not surprising that a 2006 Gallup survey found that 29 percent of the workforce was required to hold a license from a government agency (Kleiner and Krueger 2008).as well as a nice summary of the existing economic literature on licensing.
Licensing affects a much larger percentage of workers than either the minimum wage or unionization. in 2003, less than 3 percent of hourly workers were paid the minimum wage (Kaufman and Hotchkiss, 2006, 283). as for unionization, we reproduce Figure 1 from Kleiner and Krueger (2008); licensing affects about two and a half times more workers than unionization.
Adam Smith and Milton Friedman:
Friedman formulates the challenge, implicit in Smith, that licensing destroys opportunities and suppresses benefits while achieving little to nothing in the way of quality assurance above what could be achieved by less coercive arrangements, whether they be optional state certification or purely voluntary and private forms of assurance.Prominent strands of research
Licensing as an entry barrierRead the section for a nice summary of the what economists have discovered on these topics.
The distributional effects of licensing barriers to entry
The effect of licensing on the interstate mobility of workers
The effect of licensing on wages and incomes (by one estimate licenses provide a 15 percent wage premium).
The effect of licensing on quality.
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