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

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  • Marc T. Law
  • Sukkoo Kim

Abstract

This paper explores the origins and effects of occupational licensing regulation in late nineteenth and early twentieth century America. Was licensing regulation introduced to limit competition in the market for professional services at the expense of efficiency? Or was licensing adopted to reduce informational asymmetries about professional quality? To investigate these hypotheses, we analyze the determinants of licensing legislation and the effect of licensing on entry into eleven occupations. We also examine the impact of medical licensing laws on entry into the medical profession, physician earnings, mortality rates, and the incidence of medical malpractice. We believe that, at least for the Progressive Era, the evidence is more consistent with the asymmetric information hypothesis than the industry capture hypothesis.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10467.

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Date of creation: May 2004
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Publication status: published as Law, Marc T. and Sukkoo Kim. "Specialization And Regulation: The Rise Of Professionals And The Emergence Of Occupational Licensing Regulation," Journal of Economic History, 2005, v65(3,Sep), 723-756.
Handle: RePEc:nbr:nberwo:10467

Note: HE DAE LS
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Cited by:
  1. Catherine Schaumans & Frank Verboven, 2008. "Entry and regulation: evidence from health care professions," RAND Journal of Economics, RAND Corporation, RAND Corporation, vol. 39(4), pages 949-972.
  2. 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.
  3. 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.
  4. Mario Pagliero, 2007. "The Impact of Potential Labor Supply on Licensing Exam Difficulty in the US Market for Lawyers," CHILD Working Papers, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY wp19_08, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  5. 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.
  6. Brenton Peterson & Sonal Pandya & David Leblang, 2014. "Doctors with borders: occupational licensing as an implicit barrier to high skill migration," Public Choice, Springer, Springer, vol. 160(1), pages 45-63, July.
  7. Morris M. Kleiner & Richard M. Todd, 2009. "Mortgage Broker Regulations That Matter: Analyzing Earnings, Employment, and Outcomes for Consumers," NBER Chapters, National Bureau of Economic Research, Inc, in: Studies of Labor Market Intermediation, pages 183-231 National Bureau of Economic Research, Inc.
  8. 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, Elsevier, vol. 51(C), pages 77-93.
  9. Martha A. Starr, 2012. "Contributions of Economists to the Housing-Price Bubble," Journal of Economic Issues, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 46(1), pages 143-172, March.
  10. Pagliero, Mario, 2013. "The impact of potential labor supply on licensing exam difficulty," Labour Economics, Elsevier, Elsevier, vol. 25(C), pages 141-152.
  11. 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.
  12. Chan-Kang, Connie & Pardey, Philip G. & Smith, Vincent H., 2006. "The Evolution of Economics Clubs: 1777-2000," Staff Papers, University of Minnesota, Department of Applied Economics 14135, University of Minnesota, Department of Applied Economics.
  13. Evans, R. & Guinnane, T.W., 2006. "Reputational Externality and Self-Regulation," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0628, Faculty of Economics, University of Cambridge.
  14. 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), Cattaneo University (LIUC), vol. 10(2), pages 177-198, August.

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