Occupational Licensing and the Limits of Public Choice Theory
Administrative Law Review Accord (April 18, 2019).
18 Pages Posted: 9 May 2019
Date Written: April 18, 2019
Public choice theory has long been the dominant lens through which economists and other scholars have viewed occupational licensing. According to the public choice account, practitioners favor licensing because they want to reduce competition and drive up their own wages. This essay argues that the public choice account has been overstated, and that it ironically has served to distract from some of the most important harms of licensing, as well as from potential solutions. We emphasize three specific drawbacks of this account. First, it is more dismissive of legitimate threats to public health and safety than the research warrants. Second, it places disproportionate emphasis on those professions for which the justification for licensing seems weakest, rather than on those for which the justification is stronger. Third, it puts an inordinate focus on whether an occupation is licensed, rather than how it is licensed. Judges and policymakers should bear these limitations in mind when evaluating legal challenges or proposed reforms to licensing laws.
Keywords: occupational licensing, occupational regulation, consumer protection, public choice theory, regulatory theory, administrative law, regulatory design, regulation, law and political economy, state and local goverment
JEL Classification: K21, K23
Suggested Citation: Suggested Citation