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Does Regulation Affect Economic Outcomes?: The Case of Dentistry

  • Morris M. Kleiner
  • Robert T. Kudrle
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    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.

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    File URL: http://www.nber.org/papers/w5869.pdf
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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5869.

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    Date of creation: Jan 1997
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    Publication status: published as Kleiner, Morris M. and Robert T. Kudrle. "Does Regulation Affect Economic Outcomes? The Case Of Dentistry," Journal of Law and Economics, 2000, v43(2,Oct),548-582.
    Handle: RePEc:nbr:nberwo:5869
    Note: LS
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    1. Milton Friedman & Simon Kuznets, 1954. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1, May.
    2. Shapiro, Carl, 1986. "Investment, Moral Hazard, and Occupational Licensing," Review of Economic Studies, Wiley Blackwell, vol. 53(5), pages 843-62, October.
    3. 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.
    4. Derek A. Neal & William R. Johnson, 1995. "The Role of Pre-Market Factors in Black-White Wage Differences," NBER Working Papers 5124, National Bureau of Economic Research, Inc.
    5. Freeman, Richard Barry & Kleiner, Morris M., 1990. "The Impact of New Unionization on Wages and Working Conditions," Scholarly Articles 4632238, Harvard University Department of Economics.
    6. 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.
    7. 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.
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