- Occupational licensing rules are pervasive and often arbitrary. It takes different amounts of money and time to become certified in different states for the same profession, and the benefits of these rules are unsubstantiated. This has a direct cost for workers, in terms of both fees and foregone wages, and an indirect cost for consumers, in the form of higher prices and reduced mobility.
- Trade associations play a key role in implementing and maintaining these rules. Professional associations can shape requirements around benefits for their members rather than the public interest, and they have an incentive to maintain high barriers to entry in order to reduce competition and raise wages for their members.
- Licensing rules are often ineffective in achieving their stated goals. Research shows that licensing rules don’t necessarily increase quality or public health and safety, and that they may reduce employment and exacerbate labor shortages in certain industries.
- Reforming occupational licensing is a start, but it is not enough. Rethinking occupational licensing is part of the larger project of building effective government and ensuring protection against health and safety risks. This requires more than deregulation, such as clear regulations and effective enforcement.
Published February 24, 2023
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