State Licensing Boards, Antitrust, and Innovation

State Licensing Boards, Antitrust, and Innovation

[T]he purported benefits of occupational licensing requirements — particularly those imposed by active market participants — often fail to come to fruition in practice. This is not entirely surprising, given the disparity in licensed occupations among states. A 2015 White House report, for example, found that over 1,100 occupations are regulated in at least one state, but fewer than 60 are regulated in all 50 states. These numbers demonstrate that there exist “substantial differences” between what occupations states elect to regulate, thereby undermining the typical safety arguments associated with occupational licensing. That is, if licensing restrictions were truly required to protect consumers — or truly enhanced consumer outcomes — we would expect to see all the states regulating the same industries. But if only a handful of states require a license for, e.g., a locksmith or interior decorator, and the vast majority of states do not require such a license and are not experiencing poor consumer, then consumers are clearly not the primary beneficiaries of such laws. This is consistent with reports investigating occupational licensing, which have frequently found regulators behaving in ways that further their own ends, not consumers’.

James C. Cooper, Elyse Dorsey, and Joshua D. Wright

Regulatory Transparency Project

November 13, 2017

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