Occupational Licensing: A Barrier To Entrepreneurship

Sep 16, 2015
  • Description

Since colonial times in America, governments have imposed licenses on certain professions and trades in the name of public health or safety. Today, licensing most often originates at the state level. But all levels of government engage in this form of regulation and ought to care about the labor market inefficiencies that are caused by licensing. Over time, the number of licensed professions has grown and expanded to industries that pose little or no threat to public safety. In some states for example, a license is required to become a tour guide, sell caskets, or braid hair. About 29 percent of jobs require a government-issued license -- a dramatic increase from just forty years ago when only 10 percent of workers were licensed. These licensure requirements result in fewer practitioners, who can demand higher wages, while also stifling new business creation and innovation.