Guild-Ridden Labor Markets

The Curious Case of Occupational Licensing

By Morris M. Kleiner

2015, 117 pp 
W.E. Upjohn Institute for Employment Research

$14.99 paperback


In his third Upjohn Press book on occupational licensing, Morris M. Kleiner examines why the institution of occupational licensing has had such a curious evolution and influence in the United States, the European Union, and China. He also discusses the many similarities it has to guilds.

"No one has done more to put the issue of occupational licensing firmly on the policy agenda than Morris Kleiner. This careful book brings together his path-breaking scholarship on the issue, effortlessly combining economics, history, law, statistical analysis, and a keen understanding of the politics involved. Kleiner is the world's leading scholar of occupational licensing, and this book should stand as a reference for decades to come." –Justin Wolfers, University of Michigan

Why care about occupational licensing? Because occupational licensing is a labor market institution that is rapidly growing in scope and influence. Currently, nearly 30 percent of workers in the United States require a license to work for pay, and more than 800 occupations have licensing requirements in at least one state.

It is also a growing factor in the labor markets of countries around the world, including China and those in the European Union. Add to this the fact that occupational licensing impacts the market for services in a number of critical ways, and it’s easy to conclude that this is a subject that merits heightened attention. This is what Morris Kleiner brings in his new book from the Upjohn Press. In Guild-Ridden Labor Markets: The Curious Case of Occupational Licensing, Kleiner examines why occupational licensing has grown over the past 50 years, why some occupations are regulated and others are not, and the economic impacts that licensing imposes on labor market mobility, wage determination, prices, and the quality of services delivered. Kleiner begins by presenting a historical overview of the evolution of occupational licensing, highlighting three occupations that progressed from no or little regulation to full licensing requirements.

Next, he looks at the aggregate costs resulting from licensing, both in dollars to consumers (as much as $203 billion per year) and jobs (up to 2.8 million fewer) as 3 well as licensing’s impact on labor market mobility and the quality of services provided. He explains how licensing determines who may perform certain services and then broadens his focus by looking at licensing in different institutional and international contexts.

Kleiner closes with a call for more flexible reciprocity between states for professions such as physicians, dentists, and teachers in order to allow labor markets to operate more efficiently. He also points out that states may want to loosen licensing requirements for certain jobs: where occupations such as tour guides, travel agents, and locksmiths currently require licenses in some states, perhaps a lesser form of regulation—e.g., certification,—would better serve consumers. Overall, this book delivers a nontechnical examination of occupational licensing that will afford a variety of readers a deeper understanding of the guild-like institution that is occupational licensing.