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Specialization and Regulation: The Rise of Professionals and the Emergence of Occupational Licensing Regulation

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  • LAW, MARC T.
  • KIM, SUKKOO

Abstract

During the Progressive Era, advances in knowledge and specialization led to the emergence of modern-day professions. This growth in professions was accompanied by the adoption of occupational licensing regulation. In this article we explore the origins and effects of occupational licensing regulation during this period. Although most studies argue that occupational licensing regulation is adopted to restrict entry and reduce competition, the evidence from the Progressive Era suggests that regulation arose to improve markets as specialization and advances in knowledge made it increasingly difficult for consumers to judge the quality of professional services.Not long ago, the Governor of a midwestern state was approached by representatives of a particular trade anxious to enlist the Governor s support in securing passage of legislation to license their trade. Governor, the men said, passage of this licensing act will ensure that only qualified people will practice this occupation; it will eliminate charlatans, incompetents or frauds; and it will thereby protect the safety and welfare of the people of this state. The governor, from long experience, was somewhat skeptical. Gentlemen, he asked, are you concerned with advancing the health, safety and welfare of the people under the police powers of the state, or are you primarily interested in creating a monopoly situation to eliminate competition and raise prices? The spokesman for the occupational group smiled and said, Governor, we re interested in a little of each. Council of State GovernmentsCouncil of State Governments, Occupational Licensin g, p. 1.

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Bibliographic Info

Article provided by Cambridge University Press in its journal The Journal of Economic History.

Volume (Year): 65 (2005)
Issue (Month): 03 (September)
Pages: 723-756

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Handle: RePEc:cup:jechis:v:65:y:2005:i:03:p:723-756_00

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Cited by:
  1. Price V. Fishback & Rebecca Holmes & Samuel Allen, 2008. "Lifting the Curse of Dimensionality: Measures of the Labor Legislation Climate in the States During the Progressive Era," NBER Working Papers 14167, National Bureau of Economic Research, Inc.
  2. Evans, R. & Guinnane, T.W., 2006. "Reputational Externality and Self-Regulation," Cambridge Working Papers in Economics 0628, Faculty of Economics, University of Cambridge.
  3. Daniel B. Klein & Benjamin Powell & Evgeny S. Vorotnikov, 2012. "Was Occupational Licensing Good for Minorities? A Critique of Marc Law and Mindy Marks," Econ Journal Watch, Econ Journal Watch, vol. 9(3), pages 210-233, September.
  4. Morris M. Kleiner & Richard M. Todd, 2007. "Mortgage Broker Regulations That Matter: Analyzing Earnings, Employment, and Outcomes for Consumers," NBER Working Papers 13684, National Bureau of Economic Research, Inc.
  5. Pagliero, Mario, 2013. "The impact of potential labor supply on licensing exam difficulty," Labour Economics, Elsevier, vol. 25(C), pages 141-152.
  6. Mario Pagliero, 2011. "The Impact of Potential Labor Supply on Licensing Exam Difficulty in the US Market for Lawyers," Working papers 18, Former Department of Economics and Public Finance "G. Prato", University of Torino, revised May 2013.
  7. Martha A. Starr, 2011. "Contributions of economists to the housing-price bubble," Working Papers 2011-03, American University, Department of Economics.
  8. Marc T. Law & Mindy S. Marks, 2013. "From Certification To Licensure: Evidence From Registered And Practical Nurses In The United States, 1950-1970," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 10(2), pages 177-198, August.
  9. Brenton Peterson & Sonal Pandya & David Leblang, 2014. "Doctors with borders: occupational licensing as an implicit barrier to high skill migration," Public Choice, Springer, vol. 160(1), pages 45-63, July.
  10. Catherine Schaumans & Frank Verboven, 2008. "Entry and regulation: evidence from health care professions," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 949-972.
  11. Matthew Chesnes & Weijia (Daisy) Dai & Ginger Zhe Jin, 2014. "Banning Foreign Pharmacies from Sponsored Search: The Online Consumer Response," NBER Working Papers 20088, National Bureau of Economic Research, Inc.
  12. Chan-Kang, Connie & Pardey, Philip G. & Smith, Vincent H., 2006. "The Evolution of Economics Clubs: 1777-2000," Staff Papers 14135, University of Minnesota, Department of Applied Economics.
  13. Franck, Raphaƫl & Johnson, Noel D. & Nye, John V.C., 2014. "From internal taxes to national regulation: Evidence from a French wine tax reform at the turn of the twentieth century," Explorations in Economic History, Elsevier, vol. 51(C), pages 77-93.
  14. Morris M. Kleiner & Richard M. Todd, 2009. "Mortgage Broker Regulations That Matter: Analyzing Earnings, Employment, and Outcomes for Consumers," NBER Chapters, in: Studies of Labor Market Intermediation, pages 183-231 National Bureau of Economic Research, Inc.

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