Labor Market Monopsony: Trends, Consequences, and Policy Responses

In 2015, CEA, the Treasury Office of Economic Policy, and the Department of Labor released a report on the evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines. Too often, policymakers do not carefully weigh these costs and benefits when making decisions about whether or how to regulate a profession through licensing. Following the report, the Administration worked with Congress, State legislators, and experts to draft and present a series of best practices to help State and local governments better tailor their occupational licensing laws to meet consumer health and safety needs without acting as undue barriers to entry into particular occupations. Since the release of the White House report and recommendations last year, legislators in at least 11 States have proposed 15 reforms in line with these recommendations, and four State bills have passed so far.

Council of Economic Advisors

October 2016

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