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Does Regulation Affect Economic Outcomes? The Case of Dentistry

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  • Kleiner, Morris M
  • Kudrle, Robert T

Abstract

This study examines the role of variations in occupational licensing policies in improving the quality of services provided to consumers and the effect of restrictive regulations on the prices of certain services and on the earnings of practitioners. Theory suggests that more restrictive licensing may raise prices and at the same time raise demand by reducing uncertainty about the quality of the services. This article uses unique data on the dental health of incoming Air Force personnel to analyze empirically the effects of varying licensing stringency among the states. It finds that tougher licensing does not improve outcomes, but it does raise prices for consumers and the earnings of practitioners. These results cast doubt on the principal public interest argument in favor of more stringent state licensing practices. Copyright 2000 by the University of Chicago.

Suggested Citation

  • Kleiner, Morris M & Kudrle, Robert T, 2000. "Does Regulation Affect Economic Outcomes? The Case of Dentistry," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 547-582, October.
    • Handle: RePEc:ucp:jlawec:v:43:y:2000:i:2:p:547-82
    DOI: 10.1086/467465
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    References listed on IDEAS

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    1. Milton Friedman & Simon Kuznets, 1945. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1.
    2. 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.
    3. Victor R. Fuchs, 1982. "Economic Aspects of Health," NBER Books, National Bureau of Economic Research, Inc, number fuch82-1.
    4. 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.
    5. Polachek, Solomon William, 1981. "Occupational Self-Selection: A Human Capital Approach to Sex Differences in Occupational Structure," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 60-69, February.
    6. Simon Rottenberg, 1980. "Occupational Licensure and Regulation," Books, American Enterprise Institute, number 968900, September.
    7. Fuchs, Victor R. (ed.), 1982. "Economic Aspects of Health," National Bureau of Economic Research Books, University of Chicago Press, number 9780226267852, September.
    8. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
    9. Freeman, Richard B & Kleiner, Morris M, 1990. "The Impact of New Unionization on Wages and Working Conditions," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 8-25, January.
    10. 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.
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