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Does Regulation Trade-Off Quality against Inequality? The Case of German Architects and Construction Engineers

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Listed:
  • Rostam-Afschar, Davud
  • Strohmaier, Kristina

Abstract

We exploit an exogenous price increase by about 10% for architectural services to answer the question how rice regulation affects income inequality and service quality. Using individual-level data from the German microcensus for the years 2006 to 2012, we find a significant reform effect of 8% on personal net income for self-employed architects and construction engineers. This group moved from the second lowest to the highest quintile of the net income distribution. This increase in inequality is associated with a deterioration of service quality. The reform reduced average scores of a peer ranking for architects by 18%.

Suggested Citation

  • Rostam-Afschar, Davud & Strohmaier, Kristina, 2018. "Does Regulation Trade-Off Quality against Inequality? The Case of German Architects and Construction Engineers," GLO Discussion Paper Series 256, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:256
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    References listed on IDEAS

    as
    1. Davud Rostam-Afschar, 2014. "Entry regulation and entrepreneurship: a natural experiment in German craftsmanship," Empirical Economics, Springer, vol. 47(3), pages 1067-1101, November.
    2. Robin Jessen & Davud Rostam-Afschar & Sebastian Schmitz, 2018. "How important is precautionary labour supply?," Oxford Economic Papers, Oxford University Press, vol. 70(3), pages 868-891.
    3. Koumenta, Maria & Pagliero, Mario, 2018. "Occupational Licensing in the European Union: Coverage and Wage Effects," CEPR Discussion Papers 12577, C.E.P.R. Discussion Papers.
    4. Pagliero, Mario, 2011. "What is the objective of professional licensing? Evidence from the US market for lawyers," International Journal of Industrial Organization, Elsevier, vol. 29(4), pages 473-483, July.
    5. Steiner, Viktor & Fossen, Frank & Rees, Ray & Rostam-Afschar, Davud, 2017. "How Do Entrepreneurial Portfolios Respond to Income Taxation?," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168302, Verein für Socialpolitik / German Economic Association.
    6. Milton Friedman & Simon Kuznets, 1954. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1, July-Dec.
    7. Milton Friedman & Simon Kuznets, 1954. "The Data on Income from Independent Professional Practice," NBER Chapters,in: Income from Independent Professional Practice, pages 46-62 National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Regulation; Inequality; Wages; Service Quality; Entrepreneurship; Natural Experiment;

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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