Occupational licensing

Occupational licensing is the requirement to hold a license issued by a regulatory body or professional organisation, before practising a trade, profession or other occupation. Such requirements are commonly defended as a form of consumer protection against the risk of loss from unqualified or incompetent service providers. Economists including Milton Friedman have criticised occupational licensing as a restriction on competition. Some left-wing critics agree, arguing that it serves as a way for members of certain trades to use state power to maintain their class power by restricting entry to the trade and making it difficult, though not impossible, for the poor to enter the professions.^[1]

Occupational research receives relatively sparse treatment in Labor Economics textbooks compared to other market regulations such as the minimum wage or labor unions. One possible explanation, advocated by libertarian Chicago School economists, is that labor economists favor government regulation. Given the amount of evidence pointing to the inefficiency of occupational licensing, labor economists may choose to avoid its treatment from sympathy for government regulation.^[2]

References

1. ^ Magali Larson, The Rise of Professionalism: A Sociological Analysis (Univ of California Press, 1979).
2. ^ Stephenson, E. Frank, and Erin E. Wendt. 2009. Occupational Licensing: Scant Treatment in Labor Texts. Econ Journal Watch 6(2): 181-194. [1]