The research on state licensing laws is robust and has been studied by various think tanks representing a diverse set of political leanings, as well as by scholars at a variety of universities. Both the Obama and Trump administrations have weighed in on the issue. While the perspectives of these reports are different, they agree there are negative consequences associated with occupational licensing.
Licensing an occupation restricts the supply of workers for that job, which ultimately limits competition in the market and drives up prices for consumers. Research suggests that licensing increases wages for licensed workers, but also increases prices for consumers, depending on how restrictive the occupational licensing requirements are.
Some studies suggest that licensing may play a role in protecting public health and safety, but only in relatively small ways and only for a limited number of occupations. Most of the research suggests state licensing is too extensive and arbitrary to positively impact public safety. Indeed, by limiting the supply of workers — especially in the health care industry — it could just as easily be the case that licensing laws harm the public by artificially limiting the availability and increasing the costs of important medical services. Even in occupations that conventional wisdom suggests should be subject to licensing requirements — such as electricians — the empirical research shows little or no positive benefit to public safety attributable to licensing.
There has been limited research undertaken regarding the impact of licensing laws on people with criminal backgrounds. But there is a strong theoretical case to be made that licensing requirements could lead to worse outcomes for exoffenders and the public at large. Stephen Slivinski of Arizona State University explains:
Decades of academic literature indicates that gainful employment is one of the best ways to keep ex-prisoners from re-offending and ending up back in prison. So, not surprisingly, occupational licensing barriers that make it harder or impossible for them to reintegrate into the labor force can increase the growth rate in criminal recidivism.
A 2016 report from Slivinski found an association between occupational licensing laws and recidivism rates. In his report “Turning Shackles into Bootstraps,” Slivinski estimates that:
[B]etween 1997 and 2007 the states with the heaviest occupational licensing burdens saw an average increase in the three-year, new-crime recidivism rate of over 9%. Conversely, the states that had the lowest burdens and no such [good moral] character provisions saw an average decline in that recidivism rate of nearly 2.5%.