Working Paper: NBER ID: w3984
Authors: Morris M. Kleiner; Robert T. Kudrle
Abstract: The effect of licensing as a mechanism to control entry into occupations has been a neglected area of both regulation and labor market research. This study examines the role of occupational licensing for entry into dentistry, an occupation with standards that vary by state. Our research first closely replicates Freeman's previous work on labor market cobwebs by employing national data to examine purely market phenomena in the determination of training for the dental profession. We subsequently approximate the government barrier to practice in the profession by adding a weighted average state examination pass rate to the previous model. Next, we employ pooled cross-section time series analysis to explore market determinants of professional entry with state level data. Finally, these results are supplemented by measures of statutory and pass rate entry restrictiveness. Our most consistent evidence suggests that a higher state licensing failure rate deters entry into dental practice.
Keywords: Occupational Licensing; Dentistry; Labor Market; Entry Barriers
JEL Codes: J44; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher state licensing failure rate (R48) | reduced numbers of new dentists entering the profession (J44) |
| higher state licensing failure rate (R48) | deterrence of entry into dental practice (J44) |
| state licensing restrictiveness (D45) | flow of dentists into practice (J44) |
| starting salaries and state economic conditions (J39) | influence entry decisions (G11) |
| licensing provisions (D45) | entry decisions (Y20) |