The Effects of Occupational Licensure on Competition, Consumers, and the Workforce
Licensure is not the only or the most effective way to ensure quality. While occupational licensure is intended to protect consumers from harm, there are many other less-burdensome mechanisms to promote public safety. For instance, liability law and civil and criminal laws against fraud protect consumers. In addition, a host of private mechanisms ensure that market providers are accountable. These include private certifications, insurance, bond-posting, brand reputation, customer review platforms like Yelp and Google reviews, and the third-party validation of organizations like Angie’s List, Consumer Reports, and Underwriters Laboratories. Competition itself may be the best alternative to licensure. As the economist Alfred Kahn put it after decades of extensive work as a regulator and researcher, “Whenever competition is feasible, it is, for all its imperfections, superior to regulation as a means of serving the public interest.”
Patrick McLaughlin, Matthew D. Mitchell, and Anne Philpot
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