03/29/2024

Improving Health Care Through Occupational Licensing Reform

The rules that determine who can legally work in an occupation and provide particular services—known as occupational licensure—affect a wide swath of workers and are important constraints on how the labor market and economy function. Despite a welcome increase in discussions of occupational licensing in recent years, and a body of research dating back decades, core questions concerning the number of licensed workers and their occupations remain unanswered.

This lack of information may have contributed to the considerable policy attention focused on small occupations where the existence of licensure is most surprising—and sometimes appears unnecessary—to outsiders, such as florists in Louisiana. While it is certainly necessary to subject this sort of licensure to rigorous cost-benefit analysis, it is important to maintain perspective regarding the economic consequences of different types of licensure. These economic consequences are likely to be small for occupations that employ few people, are only licensed in some states, and are often not licensed in especially stringent ways.

Fortunately, a recent collection of comprehensive worker-level data for the entire United States is now available that is helping to address these unanswered questions—and redirect attention toward fields in which licensing is pervasive and economically meaningful.

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