Putting Licensing to the Test

[T]his report puts occupational licensing to the test, using the District of Columbia’s now-defunct tour guide licensing scheme as a case study. It finds that the scheme had no effect on the quality of tours in the nation’s capital: An examination of 15,000 TripAdvisor reviews reveals that consumers rated guided tours just as highly after D.C. stopped licensing guides in 2014 as they did before—despite the entry of many new and untested guides into the market. While the scheme was in force, consumers awarded D.C. tour companies an average of 4.27 out of 5 stars; after it was eliminated, the average rating was 4.3 stars.
Thus, instead of ensuring quality tours, D.C.’s licensing scheme just made it harder for some would-be guides to break into the business and kept others out altogether.

Angela C. Erickson

Institute for Justice

October 2016

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