Occupational Licensing and the Interstate Mobility of Professionals

This paper will focus special attention on the legal profession. The legal profession is granted special consideration because the practice of law, unlike the practice of dentistry or medicine, may have some important statespecific features. It can be and has been argued that a seasoned lawyer is reluctant to launch a new practice in another state because the law and procedure vary from state to state. Lesser interstate mobility of lawyers might be explained by any one or a combination of three hypotheses: (1) licensing with restrictions on reciprocity, (2) investments in local goodwill (specific capital), and (3) investments in state specific law and procedure. A major endeavor of this paper is to formulate tests that distinguish between these three hypotheses…
While the lower interstate mobility of lawyers could be traced to investments in state-specific law and procedure, the results of the tests suggest that the effects of investment in state-specific law on mobility are apt to be small. The lower mobility of lawyers, like the lower mobility of dentists, appears traceable to licensing and limitations on the use of reciprocity.

B. Peter Pashigian

The Journal of Law and Economics

April 1979

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