How Occupational Licensing Redistributes Income

No benefits to consumers to be found.

The Mercatus Center at George Mason University has a new working paper looking at the effects of occupational licensure in the area of opticians. The results show the problems of state licensing in a variety of areas.

From 1950 to today, it is estimated that the percent of occupations now requiring a license has risen from five percent to 30 percent. In other words, the percent of occupations which require people to pay a fee to the state or take mandated classes has risen six-fold. According to Dr. Morris Kleiner of the University of Minnesota, most of this licensing drives up costs for consumers but does not lead to better health and safety results.

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The Mercatus paper, authored by Dr. Edward Timmons and Anna Mills, compares the 21 states which require a license for an optician and those which do not. Opticians are eye care specialists who fit glasses and lenses to correct vision. They do not require a license in Michigan.

The paper finds that licensing causes a redistribution of wealth from consumers to opticians with no observable benefit in health or quality of services. Specifically, the authors write:

“The results suggest that opticians earn 0.3-0.5 percent more for each year that a licensing statute is in effect. In addition, tougher licensing provisions (in the form of more exams or longer education requirements) increase optician earnings by 2-3 percent. In an examination of vision insurance and malpractice insurance premiums, we find little evidence that optician licensing has enhanced the quality of services delivered to consumers. By and large, optician licensing appears to be reducing consumer welfare by raising the earnings of opticians without enhancing the quality of services delivered to consumers.”

This is a fairly common finding, backed up by research from scholars at many different organizations. Licensing should only be required if the public’s health and safety is at risk — otherwise, it simply redistributes wealth from consumers to select special interests.


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