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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%.

Suggested Citation

  • 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. 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.
    2. 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.
    3. 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.
    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. 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.

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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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