Certifying or licensing authority may rest with a government agency or with a private organization. In either case, review boards are characteristic of licensing or certifying bodies. Historically, boards have been composed of current practitioners, not consumers (Rottenberg 1980, Shimberg 1982). Shimberg identifies several models for structure of certification or licensing boards:
Fully autonomous boards (the most common model).
Autonomous boards assisted by central agencies for routine functions.
Essentially autonomous boards, with central agencies which have some authority for some licensing or certifying functions (the second most common model).
Boards subject to review by a central agency.
Boards that are advisory to a central (governmental) agency which has the licensing or certifying authority.
Appointments to government regulatory boards are usually made by governors (Haug 1980), and members of the profession are the majority of the board. This is the case, for example, with Michigan's forester registration. In self certification, usually authority is delegated to the board by enabling legislation. An alternative model would be for a national organization with considerable recognition and public trust, such as the American Forest and Paper Association (AF&PA) or the Forest Stewardship Council (FSC), to establish a review board and a certification process.
RequirementsEither general model of governmental or self certification incorporates standards for education, training, and experience and often involves passing an examination.
Examinations that can predict quality job performance are almost impossible to design and administer. They may be too rigorous, being used simply as a means to restrict entry into an occupation, rather than to test applicants' fitness to practice. Also, examinations may measure only how well a person can take the particular exam (Shimberg 1982). A notable case is the creation of a market in California for training in taking the contractors' exam. The training teaches applicants how to pass the exam, not how to do the actual contracting work (Maurizi 1980).
Generally, boards are given the responsibility and authority to construct licensing examinations. Board members are not usually chosen because they can write or grade tests, but because they belong to a particular occupation (Shimberg 1982). The tests may not be reliable and may not serve the public interest in regulating the occupation.
Education, Training, and Experience
In governmental regulation, either the enabling legislation specifies the required years of education, training, or experience or it specifies that the board will do so in its rule setting. In either case, many of the criticisms of the examination system apply here, too. In fact, it can be worse. Legislators do not really know how much education or training is needed to do the job well. Educational requirements simply may be determined through custom or what the majority of the current practitioners have attained (Shimberg 1982). The current practitioners, in fact, have incentives to demand excessive training and experience requirements through training-school tuition or extended apprenticeships (Hood 1991).
The argument that the public must be protected from low-quality services, which they are not able to judge, is the rationale for occupational licensing. Licensing is expected to offer this protection by eliminating the low quality (and usually low-cost) providers and thus raising average quality (Maurizi 1980). Elimination of low cost providers does restrict consumer choice to within the range circumscribed by licensing. Consumers who are not willing or not able to pay for the new higher average quality or higher lowest cost/lowest quality service are eliminated from the market. Others may substitute lower quality services, such as their own, or use services less frequently than they would when lower cost providers were available (Hood 1991). Licensing, therefore, does not necessarily improve the quality of service or product, or promote its safety (Rottenberg 1980)—and cases to the contrary have been studied (Hood 1991).
Occupational licensing restricts the supply of the services by limiting the number of practitioners. Other things being equal, this means more profits for occupational members. The other issue is that of reducing information costs to consumers by providing education, which addresses the issue of imperfect information of markets.
If producers are certified, then consumers can better learn the qualifications and training of the producers, without limiting their supply. If consumers are willing to pay more to certified producers they make higher profits (Leland 1989).