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Does Regulation Affect Economic Outcomes?: The Case of Dentistry

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  • Morris M. Kleiner
  • Robert T. Kudrle

Abstract

This study examines the role of variations in occupational licensing policies and practices in improving the outputs of services provided to consumers, and the effect of restrictive regulations on the prices of certain services. Theory suggests that more restrictive licensing may raise prices, but that it may also raise demand by reducing uncertainty about the competency of the services. This paper uses unique data on the dental health of incoming Air Force personnel to empirically analyze the effects of varying licensing stringency among the states. We find that tougher licensing does not lead to improved outputs, but does raise prices. Our results cast doubt on the principal public interest argument in favor of the impact of more strenuous licensing practices of the more restrictive states.

Suggested Citation

  • Morris M. Kleiner & Robert T. Kudrle, 1997. "Does Regulation Affect Economic Outcomes?: The Case of Dentistry," NBER Working Papers 5869, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5869
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    References listed on IDEAS

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    1. Morris M. Kleiner & Robert T. Kudrle, 1992. "Do Tougher Licensing Provisions Limit Occupational Entry? The Case of Dentistry," NBER Working Papers 3984, National Bureau of Economic Research, Inc.
    2. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
    3. Carl Shapiro, 1986. "Investment, Moral Hazard, and Occupational Licensing," Review of Economic Studies, Oxford University Press, vol. 53(5), pages 843-862.
    4. 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.
    5. Milton Friedman & Simon Kuznets, 1954. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1.
    6. Maurizi, Alex, 1974. "Occupational Licensing and the Public Interest," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 399-413, Part I, M.
    7. Freeman, Richard B & Kleiner, Morris M, 1990. "The Impact of New Unionization on Wages and Working Conditions," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 8-25, January.
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    Cited by:

    1. Christopher J. O'Leary & Robert A. Straits, 2004. "Intergovernmental Relations in Employment Policy: The United States Experience," Book chapters authored by Upjohn Institute researchers,in: Alain Noel (ed.), Federalism and Labour market Policy: Comparing Different Governance and Employment Strategies, pages 25-82 W.E. Upjohn Institute for Employment Research.
    2. 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.

    More about this item

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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