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What is the objective of professional licensing? Evidence from the US market for lawyers

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  • Pagliero, Mario

Abstract

According to public interest theory, professional licensing solves the lemon problem generated by asymmetric information. In contrast, the capture theory claims that licensing aims at increasing professional salaries by restricting supply. This paper shows that the two theories can be identified using data from one regulated profession and provides an empirical application to the US market for entry level lawyers. The empirical results support capture theory.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 29 (2011)
Issue (Month): 4 (July)
Pages: 473-483

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Handle: RePEc:eee:indorg:v:29:y:2011:i:4:p:473-483

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Web page: http://www.elsevier.com/locate/inca/505551

Related research

Keywords: Professional licensing Legal market Bar exam;

References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Morris M. Kleiner, 2000. "Occupational Licensing," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 189-202, Fall.
  2. Kleiner, Morris M & Kudrle, Robert T, 2000. "Does Regulation Affect Economic Outcomes? The Case of Dentistry," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 547-82, October.
  3. Smith, Adam, 1776. "An Inquiry into the Nature and Causes of the Wealth of Nations," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1776.
  4. Harrington, David E & Krynski, Kathy J, 2002. "The Effect of State Funeral Regulations on Cremations Rates: Testing for Demand Inducement in Funeral Markets," Journal of Law and Economics, University of Chicago Press, vol. 45(1), pages 199-225, April.
  5. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
  6. Schaumans, Catherine & Verboven, Frank, 2006. "Entry and Regulation - Evidence from Health Care Professions," CEPR Discussion Papers 5482, C.E.P.R. Discussion Papers.
  7. Leland, Hayne E, 1979. "Quacks, Lemons, and Licensing: A Theory of Minimum Quality Standards," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1328-46, December.
  8. Pashigian, B Peter, 1977. "The Market for Lawyers: The Determinants of the Demand for and Supply of Lawyers," Journal of Law and Economics, University of Chicago Press, vol. 20(1), pages 53-85, April.
  9. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
  10. Mario Pagliero, 2010. "Licensing Exam Difficulty and Entry Salaries in the US Market for Lawyers," British Journal of Industrial Relations, London School of Economics, vol. 48(4), pages 726-739, December.
  11. Morris M. Kleiner, 2006. "Licensing Occupations: Ensuring Quality or Restricting Competition?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number lo.
  12. Haas-Wilson, Deborah, 1986. "The Effect of Commercial Practice Restrictions: The Case of Optometry," Journal of Law and Economics, University of Chicago Press, vol. 29(1), pages 165-86, April.
  13. Bresnahan, Timothy F, 1987. "Competition and Collusion in the American Automobile Industry: The 1955 Price War," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 457-82, June.
  14. Shepard, Lawrence, 1978. "Licensing Restrictions and the Cost of Dental Care," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 187-201, April.
  15. Maya N. Federman & David E. Harrington & Kathy J. Krynski, 2006. "The Impact of State Licensing Regulations on Low-Skilled Immigrants: The Case of Vietnamese Manicurists," American Economic Review, American Economic Association, vol. 96(2), pages 237-241, May.
  16. David E. Harrington, 2007. "Markets: Preserving Funeral Markets with Ready-to-Embalm Laws," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 201-216, Fall.
  17. Edward Timmons & Robert Thornton, 2008. "The Effects of Licensing on the Wages of Radiologic Technologists," Journal of Labor Research, Springer, vol. 29(4), pages 333-346, December.
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Citations

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Cited by:
  1. Mario Pagliero & Edward Timmons, 2013. "Occupational Regulation in the European Legal Market," Working papers 27, Former Department of Economics and Public Finance "G. Prato", University of Torino.
  2. Schaumans, Catherine & Verboven, Frank, 2006. "Entry and regulation - Evidence from health care professions," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/120200, Katholieke Universiteit Leuven.
  3. Michele Pellizzari & Giovanni Pica, 2010. "Liberalizing Professional Services: Evidence from Italian Lawyers," Working Papers 372, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. 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.

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