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Incidence of Strict Quality Standards: Protection of Consumers or Windfall for Professionals?

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  • Daiji Kawaguchi
  • Tetsushi Murao
  • Ryo Kambayashi

Abstract

This paper examines the effects of upgrading product quality standards on product and professional labor market equilibriums when both markets are regulated. The Japanese government revised the Building Standards Act in June 2007, requiring a stricter review process for approving the plans of large-scale buildings. This regulatory change increased the wages of certified architects in Tokyo by 30 percent but did not increase their total hours worked because of an inelastic labor supply. The stricter quality standards created a quasi rent for certified architects and owners of condominiums at a cost to consumers. Evidence suggests that the new standards increased the transaction price of existing condominiums by 15 percent in the Tokyo metropolitan area.

Suggested Citation

  • Daiji Kawaguchi & Tetsushi Murao & Ryo Kambayashi, 2014. "Incidence of Strict Quality Standards: Protection of Consumers or Windfall for Professionals?," Journal of Law and Economics, University of Chicago Press, vol. 57(1), pages 195-224.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/674867
    DOI: 10.1086/674867
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    Cited by:

    1. Morikawa, Masayuki, 2018. "Occupational licenses and labor market outcomes in Japan," Japan and the World Economy, Elsevier, vol. 48(C), pages 45-56.
    2. Trey Malone & Antonios M. Koumpias & Per L. Bylund, 2019. "Entrepreneurial response to interstate regulatory competition: evidence from a behavioral discrete choice experiment," Journal of Regulatory Economics, Springer, vol. 55(2), pages 172-192, April.
    3. MORIKAWA Masayuki, 2017. "Occupational Licenses and Labor Market Outcomes," Discussion papers 17078, Research Institute of Economy, Trade and Industry (RIETI).
    4. D. Mark Anderson & Kerwin Kofi Charles & Michael McKelligott & Daniel I. Rees, 2022. "Safeguarding Consumers Through Minimum Quality Standards: Milk Inspections and Urban Mortality, 1880-1910," NBER Working Papers 30063, National Bureau of Economic Research, Inc.
    5. Anderson, D. Mark & Charles, Kerwin Kofi & McKelligott, Michael & Rees, Daniel I., 2022. "Safeguarding Consumers through Minimum Quality Standards: Milk Inspections and Urban Mortality, 1880-1910," IZA Discussion Papers 15295, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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