Stages of Occupational Regulation: Evidence from Case Studies

Preface

xv Preface I was left wanting more . . . I liken it to the cliffhanger in a work of fiction; it has made me eager for the next installment. —Alice Ramey (2010), Bureau of Labor Statistics economist, in her review of Licensing Occupations: Ensuring Quality or Restricting Competition? As this epigraph attests, I am reasonably certain that at least one reader was on the edge of her seat while turning the pages of my last book, Licensing Occupations: Ensuring Quality or Restricting Competition?, published by the W.E. Upjohn Institute for Employment Research in 2006. Occupational licensing is not a topic that often gets mentioned with the same sense of anticipation as a Robert Ludlum spellbinder or a Sherlock Holmes mystery, but I will take modest praise wherever I can find it. Therefore, to satisfy the wishes of Alice Ramey and any other readers for a follow-up work, I have written this current book. The goal of this book is to provide new insights into how occupational regulation influences practitioners, consumers, and the public. To accomplish this goal, I provide detailed case studies of occupations at various stages of governmental regulation. The occupations selected are those of interior designers, mortgage brokers, preschool teachers, electricians and plumbers, and dentists and hygienists. Although the groups examined were not randomly selected, they reflect large occupational groups that have important economic and labor market effects. Each chapter presents the evolution and anatomy of each profession. It asks why the occupation sought licensing or other forms of governmental regulation . Furthermore, it seeks to explain to what extent regulation has changed over time and whether there is a convergence of state regulations to a national standard. What qualitative changes have occurred within the occupation? Have individuals that have attained an occupational license gained higher wages as a consequence? Have other nonmonetary outcomes within the occupation been influenced by regulation? Have consumers been affected by regulations through changes in prices and the quality of the service? To what extent do the duration and intensity of governmental regulations influence the members of the profession? By analyzing these questions, I have attempted to focus on the relevance of each issue with as much economic and statistical rigor as possible. Furthermore , I have attempted to examine the equity and efficiency trade-offs as these Kleiner2013.indb xv Kleiner2013.indb xv 9/18/2013 10:10:15 AM 9/18/2013 10:10:15 AM xvi occupations become more highly regulated over time. Specifically, to what extent is access to the regulated service reduced for those whose incomes are low? In contrast, do higher-income individuals gain by having more goodquality service providers with higher levels of training and experience? George Shultz, the astute academic and later premier statesman, opined that lags occur with general public policy issues, but that politicians are impatient (Shultz 1995). Occupational licensing generally fits this model, since it is an institution whose effects are not immediately apparent, but rather reveal their efficacy over some time. Specifically, occupational licensing usually does not regulate current practitioners, implements new exams, and develops educational and location-specific requirements so that implementing these policies takes many years. Consequently, the labor market or consumer outcomes are not immediately apparent. Understanding this institution requires a longer-run perspective before wage, price, quality, and distributional effects can be fully realized. An approach that evaluates the various stages of occupational regulation can help capture and illuminate the role that this institution has in labor and service markets. To correspond with my initial lengthy examination of the topic, readers should bring some knowledge of economics and statistics to this work in order to fully understand the material. General readers without this background, however, should have little difficulty comprehending the major portions of the book and will be able to understand its key elements. Even when the material becomes more specialized, readers without a technical background may judiciously push on, since the essential arguments and evidence explained in the book are easily understood. —Morris M. Kleiner Kleiner2013.indb xvi Kleiner2013.indb xvi 9/18/2013 10:10:16 AM 9/18/2013 10:10:16 AM ...