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Specialization and Regulation: The Rise of Professionals and the Emergence of Occupational Licensing Regulation

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  • Marc T. Law
  • Sukkoo Kim

Abstract

This paper explores the origins and effects of occupational licensing regulation in late nineteenth and early twentieth century America. Was licensing regulation introduced to limit competition in the market for professional services at the expense of efficiency? Or was licensing adopted to reduce informational asymmetries about professional quality? To investigate these hypotheses, we analyze the determinants of licensing legislation and the effect of licensing on entry into eleven occupations. We also examine the impact of medical licensing laws on entry into the medical profession, physician earnings, mortality rates, and the incidence of medical malpractice. We believe that, at least for the Progressive Era, the evidence is more consistent with the asymmetric information hypothesis than the industry capture hypothesis.

Suggested Citation

  • Marc T. Law & Sukkoo Kim, 2004. "Specialization and Regulation: The Rise of Professionals and the Emergence of Occupational Licensing Regulation," NBER Working Papers 10467, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:10467
    Note: EH DAE LS
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    References listed on IDEAS

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    JEL classification:

    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • K2 - Law and Economics - - Regulation and Business Law

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