Today, I came across an interesting-looking NBER working paper on occupational licensing, Relaxing Occupational Licensing Requirements: Analyzing Wages and Prices for a Medical Service by Kleiner et al. The paper, which I have only skimmed, examines the consequences of relaxing restrictions on what kinds of services nurse practitioners can offer to patients (as compared to services offered by doctors). Here’s a big chunk of the abstract summarizing their findings:
We find that when only physicians are allowed to prescribe controlled substances that this is associated with a reduction in nurse practitioner wages, and increases in physician wages suggesting some substitution among these occupations. Furthermore, our estimates show that prescription restrictions lead to a reduction in hours worked by nurse practitioners and are associated with increases in physician hours worked. Our analysis of insurance claims data shows that the more rigid regulations increase the price of a well-child medical exam by 3 to 16 %. However, our analysis finds no evidence that the changes in regulatory policy are reflected in outcomes such as infant mortality rates or malpractice premiums.
So, to summarize: letting nurse practitioners do more decreased the cost of care to patients without sacrificing quality. Assuming for a moment that the results hold up, this paper clearly strikes a blow against the current system of occupational licensing which puts such restrictions on nurse practitioners. Keen.
I posted the above paper to Facebook and was amused to see quick responses from two libertarian friends who read my posting of the paper as an endorsement for a general end to occupational licensing (as called for e.g. here).* But this paper contributes virtually nothing to our understanding of the possible consequences of eliminating licensing. The point of the paper is that some kinds of care can be done by a larger set of licensed professionals than currently do them – there’s not much evidence here (for or against) abandoning licensing entirely. And I think it’s telling that this paper drew such a reaction, where evidence of a regulatory imperfection is read as strong proof that the entire idea is flawed, even when the proposed alternative (i.e. no licensing) has not actually been tested.
More generally, to make social democracy work means regulating better, not (necessarily) regulating less.** It’s very much in keeping with social democratic principles to argue that particular rules should be reformed, and even better, to draw on evidence to make those arguments. But that’s a far cry from abandoning a whole class of regulation because we have evidence that they’re not perfectly implemented, especially when we’ve just been given tools to make those regulations work better.
*Some of this may have been in mocking jest, i.e. “Dan <3s neoliberal schemes for deregulation:-)".
**Regulating better has been made especially difficult lately by the performative insistence of half the political class that government as a whole must be incompetent.