Cutting the Competition?: The Effects of Licensing Barbers in Alabama

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This paper estimates the effects of Alabama’s reintroduction of barbering licensing requirements on the receipts and growth of barber shops in the state. It contains state-level comparisons of barber and beauty shops in Alabama, as well as comparing these Alabama statistics to that of nearby bordering states. In addition, I compare data from Alabama border counties to data from contiguous counties in Georgia and Florida.

The results of this analysis show that after barber licensing was introduced in Alabama, barber shop receipts grew 2.6 percentage points faster than beauty shops and barber shops per person grew 6.7 percentage points slower than beauty shops in the state. In other words, barber licensing requirements appear to have limited competition for existing Alabama barbers and they benefited with higher earnings. A similar result emerges when comparing barber shops in bordering states and bordering counties in Georgia and Florida. This comparison produces evidence consistent with the economic theory that occupational licensing restricts competition and harms consumers by limiting choice and increasing prices.