Stages of Occupational Regulation: Analysis of Case Studies

Business enterprises are rarely formed as unionized firms. Similarly, even though occupations develop similar tasks and common procedures for doing a job, they are not begun as licensed occupations. Occupations evolve, organize, and often select licensing as a method to obtain professionalism, quality, and status, as well as to limit the supply of practitioners. They tax their members through dues and engage in political activities that lead to registration, certification, and eventually licensing. The process of regulation across political jurisdictions often takes years or decades to achieve full licensure. Consequently, new occupations are often in varying stages of the regulatory process as they seek to become regulated by units of government. Since regulation mainly influences new entrants, it would take some time before the full effect of licensing would influence either the wages and employment of the individuals in the occupation or the consumers of their services. It usually takes some time for individuals who are grandfathered into the occupation, and have less measured human capital than newly regulated practitioners, to retire or leave the job. Occupations at a more mature stage of regulation would be more likely to have the benefits or advantages of the various stages of licensing than those that have recently sought or obtained regulation at different levels of government.

Morris M. Kleiner

W. E. Upjohn Institute for Employment Research

January 2013

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