The Politics of Professionalism: Reappraising Occupational Licensure and Competition Policy

Posted by Social Science Research Network

The Politics of Professionalism: Reappraising Occupational Licensure and Competition Policy

Sandeep Vaheesan & Frank A. Pasquale III (Yale University)

Abstract:     Elite economists and lawyers have united to criticize occupational licensing. They contend that licensure rules raise consumer prices and restrict labor market entry and job mobility. The Obama Administration’s Council of Economic Advisers and Federal Trade Commission have joined libertarians and conservatives in calling for occupational regulations to be scaled back.

Billed as a bipartisan boost to market competition, this technocratic policy agenda rests on thin empirical foundation. Studies of the wage effects of licensing rarely couple this analysis of its putative “costs” with convincing analysis of the benefits of the professional or vocational education validated via licensure. While some licensing rules may be onerous and excessive, licensing rules are inadequate or underenforced in other labor markets. Furthermore, by limiting labor market entry, occupational licensing rules, like minimum wage and labor laws, can help raise and stabilize working and middle class wages—goals that many center-left critics of occupational licensing claim to support.

While current antitrust law provides an ideological framework for technocratic attacks on licensing, it is fundamentally unsuited for a fair evaluation of labor markets. Contemporary antitrust law’s arcane concept of efficiency reflects neither the legislative objectives animating the antitrust statutes, nor popular understanding of what competition policy should do. Occupational licensing should reflect an expansive conception of the public interest and be the product of democratic decisionmaking—not a technocratic mission to advance an esoteric notion of “efficiency.” Both the Department of Justice and the Federal Trade Commission should make occupational licensing and collective action by workers a much lower advocacy and enforcement priority.

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