As promised, I've done some further research into occupational licensing. Given that I'm ridiculously busy in my work, I've read only one book so far: Licensing Occupations: Ensuring Quality or Restricting Competition? The author, Morris M. Kleiner, concludes that occupational licensing has no overall positive impact on quality, but that it does increase the earnings of those in regulated industries (thus redistributing money from consumers to producers). For those of you scoring at home, that's restricting competition 1, ensuring quality 0.
What I found more interesting was Kleiner's comparison of different approaches to the perceived problem of service quality. He mentions three:
- Licensing. This is the most stringent regulatory approach, since only those who are licensed are allowed to practice.
- Certification. This is less stringent, since those who are not certified may practice but are not allowed to claim that they are certified.
- Registration. Practitioners may register with the appropriate government agency, and consumers may check to see if a practitioner is registered.
I find certification appealing for several reasons:
- It can be done by an industry group, association, union, or guild, not necessarily by a government agency.
- It can be done by competing authorities. To take an example from my profession, both the Software Engineering Institute and the Association for Computing Machinery could offer certification programs for computer programmers.
- It transforms false advertising into a kind of trademark violation -- if I claim that I am an SEI Certified[tm] programmer but in fact I don't have certification, the Software Engineering Institute could go after me for trademark infringement.
- Non-certified practitioners could still offer similar services, but might not receive the compensation premium that certified practitioners receive (thus enabling those who are less risk-averse or cost-conscious to seek service from non-certified practitioners).
So I see certification as something that could be completely voluntary, offer more options to producers and consumers alike, and preserve the importance of reputational effects.
Peter Saint-Andre > Journal