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

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  • 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%.

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  • 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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    Cited by:

    1. Koumenta, Maria & Pagliero, Mario & Rostam-Afschar, Davud, 2020. "Occupational licensing and the gender wage gap," Hohenheim Discussion Papers in Business, Economics and Social Sciences 13-2020, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    2. Giesecke, Johannes & Groß, Martin & Stuth, Stefan, 2020. "Occupational Closure and Wage Inequality: How Occupational Closure Effects Vary Between Workers [Wie berufliche Schließungseffekte zwischen Arbeitnehmergruppen variieren]," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 72(S1), pages 157-195.
    3. Rostam-Afschar Davud, 2020. "Inklusive Beschäftigungspolitik: Fakten, Herausforderungen und neue Ideen zur Regulierung von Berufen," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 69(2), pages 129-139, August.
    4. Alicia Plemmons, 2022. "Occupational licensing's effects on firm location and employment in the United States," British Journal of Industrial Relations, London School of Economics, vol. 60(4), pages 735-760, December.
    5. Mario Pagliero, 2019. "Occupational Licensing in the EU: Protecting Consumers or Limiting Competition?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(1), pages 137-153, August.

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    More about this item

    Keywords

    Regulation; Inequality; Wages; Service Quality; Entrepreneurship; Natural Experiment;
    All these keywords.

    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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