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

  • LAW, MARC T.
  • KIM, SUKKOO

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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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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  1. Benham, Lee & Benham, Alexandra, 1975. "Regulating Through the Professions: A Perspective on Information Control," Journal of Law and Economics, University of Chicago Press, vol. 18(2), pages 421-47, October.
  2. Fogel, Robert W., 1993. "Economic Growth, Population Theory, and Physiology: The Bearing of Long-Term Processes on the Making of Economic Policy," Nobel Prize in Economics documents 1993-1, Nobel Prize Committee.
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  5. Dora Costa & Richard H. Steckel, 1997. "Long-Term Trends in Health, Welfare, and Economic Growth in the United States," NBER Chapters, in: Health and Welfare during Industrialization, pages 47-90 National Bureau of Economic Research, Inc.
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  12. Svorny, Shirley V, 1987. "Physician Licensure: A New Approach to Examining the Role of Professional Interests," Economic Inquiry, Western Economic Association International, vol. 25(3), pages 497-509, July.
  13. Burstein, Philip L. & Cromwell, Jerry, 1985. "Relative incomes and rates of return for U.S. physicians," Journal of Health Economics, Elsevier, vol. 4(1), pages 63-78, March.
  14. Kessel, Reuben A, 1972. "Higher Education and the Nation's Health: A Review of the Carnegie Commission Report on Medical Education," Journal of Law and Economics, University of Chicago Press, vol. 15(1), pages 115-27, April.
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  16. Victor R. Fuchs, 1969. "Production and Productivity in the Service Industries," NBER Books, National Bureau of Economic Research, Inc, number fuch69-1.
  17. David Cutler & Ellen Meara, 2001. "Changes in the Age Distribution of Mortality Over the 20th Century," NBER Working Papers 8556, National Bureau of Economic Research, Inc.
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