The introduction of professional regulation and labor market conditions

Abstract

There has been increasing concern by policy makers about the impact of occupational regulation and the process by which it is introduced. This paper examines the introduction of mandatory licensure laws to replace public certification of registered nurses at the state level. Historical analysis supports the hypothesis in economic models that small groups with concentrated interests like occupations will dominate the introduction of laws and suggests examining changes in labor market conditions may be useful in predicting future demands for legislation. Estimates of an empirical model of the diffusion of licensure across states for nurses suggests this type of quality assurance regulation was introduced first where the quality of services was probably already relatively high and that policies reducing the impact of licensure on geographical mobility may reduce pressure for new laws. Patterns in the introduction of laws also have implications for evaluating their impact.