The Costs and Benefits of Occupational Regulation

The Costs and Benefits of Occupational Regulation

This paper examines the costs and benefits of occupational regulation. Over 800 occupations arc licensed by at least one of the fifty states. When properly designed and administered, occupational licensing can protect the public’s health and safety by increasing the quality of professionals’ services through mandatory entry requirements — such as education — and business practice restrictions — such as advertising restrictions. This report finds, however, that occupational licensing frequently increases prices and imposes substantial costs on consumers. At the same time, many occupational licensing restrictions do not appear to realize the goal of increasing the quality of professionals’ services. While the majority of the evidence indicates that licensing proposals are often not in the consumers’ best interest, we cannot conclude that the costs of licensing always exceed the benefits to consumers. In considering any licensing proposal, it is important to weigh carefully the likely costs against the prospective benefits on a case by case basis.

Carolyn Cox and Susan Foster

Federal Trade Commission


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