Battles Among Licensed Occupations: Analyzing Government Regulations on Labor Market Outcomes for Dentists and Hygienists
Occupational licensing is among the fastest-growing labor market institutions in the U.S. economy. One of the key features of occupational licensing is that the law determines who gets to do the work. In those cases where universally licensed occupations are both complements to and substitutes for one another in providing a service, the government determines who can do the tasks that are required for the consumer. In this study, we examine dentists and dental hygienists, who are both universally licensed and provide complementary services to patients, but may also be substitutes as service providers. We focus on the labor market implications of governmental requirements on permissible tasks and the supervision of hygienists' activities by dentists. Since there are elements of monopsony in the market we examine, we use the model as a guide for our analysis. We find that states that allow hygienists to be self-employed have about 10 percent higher earnings, and that dentists in those states have lower earnings and slower employment growth. Several sensitivity and falsification tests using other regulated and partially regulated occupations show that our licensing measures are generally robust to alternative specifications. Our estimates are consistent with the view that winning the policy and legal battle in the legislature and courts on the independence of work rules matters in the labor market for these occupations.
We thank McKenzie Smith from the American Dental Hygienists Association for providing us with some of the data for the research project. We also thank Hwikwon Ham, Joan Gieseke, and Tanya Wanchek for comments on our research, and Yaffa Epstein for her assistance in data collection. We appreciate comments and helpful suggestions from participants in seminars at Carnegie Mellon University, London School of Economics, the University of Minnesota and the Upjohn Institute for Employment Research. We also thank the Upjohn Institute for Employment Research for their support of the research program on occupational regulation. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- States that require dental hygienists to be supervised by dentists suffer a 1 percent annual reduction in the output of dental services...