The Multiple Justifications of Occupational Licensing

Posted by Social Science Research Network

The Multiple Justifications of Occupational Licensing

By Nick Robinson (Yale)

About a quarter of all workers in the United States are now in a job that requires an occupational license. As the prevalence of occupational licensing has grown so have claims that it is overused: increasing consumers’ costs and impairing labor mobility and economic freedom. To address these concerns, many policymakers and academics argue that licensing restrictions should be more closely tailored to the goal of protecting the public from harm and that, to guard against capture, practitioners should not regulate their own licensing. The federal courts, in turn, have drawn on this vision of the proper role of occupational licensing to significantly limit when and how licensing can be used through their interpretation of antitrust law and the first and fourteenth amendments of the Constitution.

This article takes a step back to argue that these critiques of occupational licensing, and the federal jurisprudence based on them, embrace a narrow view of the role of licensing in the economy that is grounded in both an embrace of economic libertarianism and an antagonism towards professional self-regulation. While this view generally recognizes licensing as justified to protect the public from harm in limited situations, it disregards a range of other values that occupational licensing has historically been understood to promote. This article draws on the social science literature to categorize these other justifications as (1) fostering communities of knowledge and competence; (2) developing relationships of trust; and (3) buffering producers from the market.

The article uses specific examples from the judiciary’s occupational licensing jurisprudence to show how acknowledging this broader set of justifications should constrain the courts from imposing a narrow view of licensing’s role in the economy. It ends by suggesting that if the federal government is to shape occupational licensing policy it is Congress and the executive, not the judiciary, which is better placed to take the lead.

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