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

Author

Listed:
  • Kawaguchi, Daiji

    () (University of Tokyo)

  • Murao, Tetsushi

    () (Kyushu University)

  • Kambayashi, Ryo

    () (Hitotsubashi University)

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 admitting the plans of large-scale buildings. This regulatory change increased the wage of certified architects in Tokyo by 30% 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 stricter quality standards increased the transaction price of used condominiums by 15% in the Tokyo metropolitan area.

Suggested Citation

  • Kawaguchi, Daiji & Murao, Tetsushi & Kambayashi, Ryo, 2013. "Incidence of Strict Quality Standards: Protection of Consumers or Windfall for Professionals?," IZA Discussion Papers 7443, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7443
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    References listed on IDEAS

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    More about this item

    Keywords

    product standard; safety regulation; incidence of government regulation; labor market of professionals;

    JEL classification:

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

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