Incidence of Strict Quality Standards: Protection of Consumers or Windfall for Professionals?

58 Pages Posted: 22 Jun 2013

See all articles by Daiji Kawaguchi

Daiji Kawaguchi

University of Tokyo - Graduate School of Economics

Tetsushi Murao

Kyushu University

Ryo Kambayashi

Hitotsubashi University

Abstract

This paper examines the effects of upgrading product quality standards on product and professional labor-market equilibriums when both markets are regulated. The Japanese government revised the Building Standards Act in June 2007, requiring a stricter review process for admitting the plans of large-scale buildings. This regulatory change increased the wage of certified architects in Tokyo by 30% but did not increase their total hours worked because of an inelastic labor supply. The stricter quality standards created a quasi-rent for certified architects and owners of condominiums at a cost to consumers. Evidence suggests that the stricter quality standards increased the transaction price of used condominiums by 15% in the Tokyo metropolitan area.

Keywords: labor market of professionals, product standard, safety regulation, incidence of government regulation

JEL Classification: J44

Suggested Citation

Kawaguchi, Daiji and Murao, Tetsushi and Kambayashi, Ryo, Incidence of Strict Quality Standards: Protection of Consumers or Windfall for Professionals?. IZA Discussion Paper No. 7443, Available at SSRN: https://ssrn.com/abstract=2283558

Daiji Kawaguchi (Contact Author)

University of Tokyo - Graduate School of Economics ( email )

Tokyo
Japan

Tetsushi Murao

Kyushu University ( email )

No Address Available

Ryo Kambayashi

Hitotsubashi University ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan

HOME PAGE: http://www.ier.hit-u.ac.jp/English/faculty/kambayashi.html

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