The pros and cons of occupational licensing

We all know that doctors, dentists, lawyers, and many other professionals must be licensed to practice their professions. In a new book, "Licensing Occupations: Ensuring Quality or Restricting Competition?" (Upjohn Institute, 2006), author Morris M. Kleiner, an labor economist at the University of Minnesota, questions whether occupational licensing has gone too far. He provides much evidence that the balance of occupational licensing has shifted away from protecting consumers and toward limiting the supply of workers in various professions.

Currently, there are perhaps as many as 3 of every 10 workers nationwide are required to obtain a license to do their job. The rationale for occupational licensing is that it helps protect the public from unqualified providers. When it comes to matters of life and death, like jobs in the medical fields, this rationale is on stronger ground than when it comes to a manicure or a shampoo.

However, author Professor Kleiner states "there is little to show that occupational regulation has a major effect on the quality of service received by consumers." In one study, Professor Kleiner found that stricter state licensing requirements for dentists did not noticeably affect the dental health of 464 Air Force recruits. Other studies have found at best weak evidence that students in classes taught by licensed teachers performed better than those taught by unlicensed teachers.

At the same time, the hurdles imposed by occupational licensing reduce the supply of workers in many regulated professions, which drives up wages in those jobs and the price of services. Dentists, for example, were found to earn and charge 11 percent more in states with the most restrictive licensing requirements.

I know this has been a long going, big discussion topic, but I think young people starting his/her career should pay attention to this thread of discussion. For an example, if you are interested in the legal profession, please be aware that the Bar has an interest in limiting the competition, but law schools want as many paying students as possible. Many observer believe that that the current law schools have produced too many lawyers in most areas.