This study tests claims that occupational licenses make consumers better off by screening out workers likely to provide inferior service. Comparing Yelp ratings for service providers in neighboring states with different licensing regimes, this study finds no evidence that licensing raises quality and some evidence that it can reduce it. In seven of nine comparisons, there was no statistically significant difference in quality between licensing regimes. In the other two comparisons, quality was higher in the less burdensomely licensed state than in the more burdensomely licensed ones. Together with other research finding high costs and limited benefits from licensing, these findings suggest policymakers should reduce and remove licensing burdens.
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