Battles Among Licensed Occupations: Analyzing Government Regulations on Labor Market Outcomes for Dentists and Hygienists
AbstractOccupational licensing is among the fastest-growing labor market institutions in the U.S. economy. One of the key features of occupational licensing is that the law determines who gets to do the work. In those cases where universally licensed occupations are both complements to and substitutes for one another in providing a service, the government determines who can do the tasks that are required for the consumer. In this study, we examine dentists and dental hygienists, who are both universally licensed and provide complementary services to patients, but may also be substitutes as service providers. We focus on the labor market implications of governmental requirements on permissible tasks and the supervision of hygienists’ activities by dentists. Since there are elements of monopsony in the market we examine, we use the model as a guide for our analysis. We find that states that allow hygienists to be self-employed have about 10 percent higher earnings, and that dentists in those states have lower earnings and slower employment growth. Several sensitivity and falsification tests using other regulated and partially regulated occupations show that our licensing measures are generally robust to alternative specifications. Our estimates are consistent with the view that winning the policy and legal battle in the legislature and courts on the independence of work rules matters in the labor market for these occupations.
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Date of creation: Nov 2010
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Find related papers by JEL classification:
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
- H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- I28 - Health, Education, and Welfare - - Education - - - Government Policy
- J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
- J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
- J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
- J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
- J8 - Labor and Demographic Economics - - Labor Standards
- K2 - Law and Economics - - Regulation and Business Law
- K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
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