IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v180y2019i1d10.1007_s11127-018-0517-5.html
   My bibliography  Save this article

Regressive effects of regulation on wages

Author

Listed:
  • James B. Bailey

    (Providence College)

  • Diana W. Thomas

    (Creighton University)

  • Joseph R. Anderson

    (Creighton University)

Abstract

A growing body of literature analyzing the distributive consequences of regulation suggests that regulation may have particularly detrimental effects on lower-income households. Regulation can be regressive if it represents the preferences of the wealthy while imposing costs on all households. The specific channel through which regulation may impose costs on lower-income households is its effects on prices and wages. In this issue, Chambers et al. (Public Choice. https://doi.org/10.1007/s11127-017-0479-z , 2017) investigate the impact of regulation on prices. They find that regulation raises consumer prices; regulatory interventions therefore are regressive because lower income consumers tend to spend larger percentages of their budgets on regulated goods and services. In this paper, we seek to analyze the effect of regulation on wages across different income levels and occupations.

Suggested Citation

  • James B. Bailey & Diana W. Thomas & Joseph R. Anderson, 2019. "Regressive effects of regulation on wages," Public Choice, Springer, vol. 180(1), pages 91-103, July.
    • Handle: RePEc:kap:pubcho:v:180:y:2019:i:1:d:10.1007_s11127-018-0517-5
    DOI: 10.1007/s11127-018-0517-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11127-018-0517-5
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11127-018-0517-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    2. Aidt, Toke S., 2010. "Green taxes: Refunding rules and lobbying," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 31-43, July.
    3. Philip Jones & John Cullis, 1986. "Is democracy regressive? A comment on political participation," Public Choice, Springer, vol. 51(1), pages 101-107, January.
    4. Douglas, George W & Miller, James C, III, 1974. "Quality Competition, Industry Equilibrium, and Efficiency in the Price-Constrained Airline Market," American Economic Review, American Economic Association, vol. 64(4), pages 657-669, September.
    5. Adam Hoffer & Rejeana Gvillo & William Shughart & Michael Thomas, 2017. "Income-expenditure elasticities of less-healthy consumption goods," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 6(1), pages 127-148, April.
    6. Shyam Kamath, 1989. "Concealed takings: Capture and rent-seeking in the Indian Sugar Industry," Public Choice, Springer, vol. 62(2), pages 119-138, August.
    7. Maloney, Michael T & McCormick, Robert E, 1982. "A Positive Theory of Environmental Quality Regulation," Journal of Law and Economics, University of Chicago Press, vol. 25(1), pages 99-123, April.
    8. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    9. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    10. Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-1187, December.
    11. James B. Bailey & Diana W. Thomas, 2017. "Regulating away competition: the effect of regulation on entrepreneurship and employment," Journal of Regulatory Economics, Springer, vol. 52(3), pages 237-254, December.
    12. Marvel, Howard P, 1977. "Factory Regulation: A Reinterpretation of Early English Experience," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 379-402, October.
    13. Aidt, Toke Skovsgaard, 2003. "Redistribution and deadweight cost: the role of political competition," European Journal of Political Economy, Elsevier, vol. 19(2), pages 205-226, June.
    14. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, Enero.
    15. Moore, Thomas Gale, 1978. "The Beneficiaries of Trucking Regulation," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 327-343, October.
    16. 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.
    17. Theodore E. Keeler, 1972. "Airline Regulation and Market Performance," Bell Journal of Economics, The RAND Corporation, vol. 3(2), pages 399-424, Autumn.
    18. Sam Peltzman, 1989. "The Economic Theory of Regulation after a Decade of Deregulation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1989 Micr), pages 1-59.
    19. Oliver E. Williamson, 1968. "Wage Rates as a Barrier to Entry: The Pennington Case in Perspective," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(1), pages 85-116.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stoyanov, Andrey & Zubanov, Nick, 2025. "Exposure to Regulation and Income Inequality in Local Labor Markets: Evidence from the U.S. over the Past Half-Century," IZA Discussion Papers 17820, Institute of Labor Economics (IZA).
    2. Mark Pingle, 2022. "Addressing threats like Covid: why we will tend to over-react and how we can do better," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 21(1), pages 9-23, June.
    3. Marc T. Law & Patrick A. McLaughlin, 2022. "Industry size and regulation: Evidence from US states," Public Choice, Springer, vol. 192(1), pages 1-27, July.
    4. Choudhury, Sanchari, 2023. "The causal effect of regulation on income inequality across the U.S. states," European Journal of Political Economy, Elsevier, vol. 80(C).
    5. Chambers, Dustin & O'Reilly, Colin, 2022. "Regulation and income inequality in the United States," European Journal of Political Economy, Elsevier, vol. 72(C).
    6. Edward Peter Stringham, 2023. "Banking regulation got you down? The rise of fintech and cryptointermediation in Africa," Public Choice, Springer, vol. 197(3), pages 455-470, December.
    7. Mariot, Evandro Antonio Sbalcheiro & Barbas, Stela & Nunes, Rui, 2024. "Enforcing the right to health in private health systems through Judicialization what can we learn from the scoping review of the cross-national perspective?," Health Policy, Elsevier, vol. 145(C).
    8. Aaron J. Staples & Dustin Chambers & Trey Malone, 2022. "How many regulations does it take to get a beer? The geography of beer regulations," Regulation & Governance, John Wiley & Sons, vol. 16(4), pages 1197-1210, October.
    9. Dustin Chambers & Colin O’Reilly, 2022. "The economic theory of regulation and inequality," Public Choice, Springer, vol. 193(1), pages 63-78, October.
    10. Bavaro, Michele & Patriarca, Fabrizio, 2022. "Referrals, intergenerational mobility and human capital accumulation," Economic Modelling, Elsevier, vol. 110(C).
    11. Staples, Malone & Chambers, Dustin & Malone, Trey, 2020. "The economic geography of beer regulations," Center for Growth and Opportunity at Utah State University 307180, Center for Growth and Opportunity.
    12. Chambers, Dustin & O'Reilly, Colin, 2019. "Entry Regulations and Income Inequality at the Regional Level," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 49(01), April.
    13. Joshua C. Hall & Shishir Shakya, 2019. "Federal Regulations and U.S. Energy Sector Output," Working Papers 19-02, Department of Economics, West Virginia University.
    14. repec:jpe:journl:1807 is not listed on IDEAS
    15. Diana W. Thomas, 2018. "A process perspective on regulation: Who bears the dispersed costs of regulation?," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 31(4), pages 395-402, December.
    16. Kim Oosterlinck & Anne-Sophie Radermecker, 2021. "Regulation or Reputation? Evidence from the Art Market," Working Papers CEB 21-006, ULB -- Universite Libre de Bruxelles.
    17. Dean, James & Geloso, Vincent, 2024. "Poverty spells and economic freedom: Canadian evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 282-296.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:elg:eechap:15325_11 is not listed on IDEAS
    2. Till Bärnighausen & David Bloom, 2009. "Changing Research Perspectives on the Global Health Workforce," PGDA Working Papers 4609, Program on the Global Demography of Aging.
    3. Irja Vormedal & Lars H. Gulbrandsen & Jon Birger Skjærseth, 2020. "Big Oil and Climate Regulation: Business as Usual or a Changing Business?," Global Environmental Politics, MIT Press, vol. 20(4), pages 143-166, Autumn.
    4. Anderson, Gary M. & Halcoussis, Dennis & Johnston, Linda & Lowenberg, Anton D., 2000. "Regulatory barriers to entry in the healthcare industry: the case of alternative medicine," The Quarterly Review of Economics and Finance, Elsevier, vol. 40(4), pages 485-502.
    5. Dennis W. Carlton & Randal C. Picker, 2014. "Antitrust and Regulation," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 25-61, National Bureau of Economic Research, Inc.
    6. Keohane, Nathaniel O. & Revesz, Richard L. & Stavins, Robert N., 1997. "The Positive Political Economy of Instrument Choice in Environmental Policy," Discussion Papers 10759, Resources for the Future.
    7. Diana W. Thomas & Michael D. Thomas, 2022. "Regulation, competition, and the social control of business," Public Choice, Springer, vol. 193(1), pages 109-125, October.
    8. J.A. den Hertog, 2010. "Review of economic theories of regulation," Working Papers 10-18, Utrecht School of Economics.
    9. Efraim Benmelech & Tobias J. Moskowitz, 2010. "The Political Economy of Financial Regulation: Evidence from U.S. State Usury Laws in the 19th Century," Journal of Finance, American Finance Association, vol. 65(3), pages 1029-1073, June.
    10. Arye L. Hillman & Heinrich W. Ursprung, 2016. "Where are the rent seekers?," Constitutional Political Economy, Springer, vol. 27(2), pages 124-141, June.
    11. James W. Hughes & Michael J. Moore & Edward A. Snyder, 2002. ""Napsterizing" Pharmaceuticals: Access, Innovation, and Consumer Welfare," NBER Working Papers 9229, National Bureau of Economic Research, Inc.
    12. Stavins, Robert, 2004. "Introduction to the Political Economy of Environmental Regulations," RFF Working Paper Series dp-04-12, Resources for the Future.
    13. Niels J. Philipsen, 2010. "Regulation Of Liberal Professions And Competition Policy: Developments In The Eu And China," Journal of Competition Law and Economics, Oxford University Press, vol. 6(2), pages 203-231.
    14. Yu-Bong Lai, 2009. "Is a Double Dividend Better than a Single Dividend?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 165(2), pages 342-363, June.
    15. Wallace E. Oates & Paul R. Portney & Wallace E. Oates & Paul R. Portney, 2004. "The Political Economy of Environmental Policy," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 1, pages 3-30, Edward Elgar Publishing.
    16. Grossman, Gene M & Helpman, Elhanan, 1995. "Trade Wars and Trade Talks," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 675-708, August.
    17. Diana W. Thomas, 2018. "A process perspective on regulation: Who bears the dispersed costs of regulation?," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 31(4), pages 395-402, December.
    18. Wenshou Yan & Kaixing Huang, 2022. "Geographic politics, loss aversion and trade policy: The case of cotton in China," The World Economy, Wiley Blackwell, vol. 45(9), pages 2854-2881, September.
    19. Olper, Alessandro, 2017. "The political economy of trade-related regulatory policy: environment and global value chain," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(3), February.
    20. George Daly & Thomas Mayor, 1986. "Equity, efficiency and environmental quality," Public Choice, Springer, vol. 51(2), pages 141-159, January.
    21. Randall S. Kroszner & Philip E. Strahan, 2000. "Obstacles to Optimal Policy: The Interplay of Politics and Economics in Shaping Bank Supervision and Regulation Reforms," CRSP working papers 512, Center for Research in Security Prices, Graduate School of Business, University of Chicago.

    More about this item

    Keywords

    Regulation; Wages; Inequality; Employment;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:180:y:2019:i:1:d:10.1007_s11127-018-0517-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.