In this paper we use data from American states to examine the consequences of the move from certification to mandatory licensure for two occupations.
During the subsequent decades, regulation of both nursing professions moved towards mandatory licensure. Since different states made the switch to mandatory licensure at different times, we can take advantage of this variation to estimate the effects of mandatory licensure relative to certification.
Second, large and small states are represented among states that switched to mandatory licensure as well as among states that that did not alter their regulatory regime.
For each nursing profession we display summary statistics separately for nurses in states that switched from certification to mandatory licensure ("treatment" states) and for nurses in states that did not adopt licensure ("control" states) during the subsequent decade.
However, in terms of years of schooling, age, sex, race, and number of children, there are no major differences among nurses in treatment and control states, which further buttresses our belief that the switch from certification to mandatory licensure may constitute a valid quasi-experiment.
To control for these factors in our analysis of the effects of mandatory licensure on wages, we estimated the following regression equation separately for each nursing profession:
Accordingly, it is the regression-adjusted DID estimate of the effects of mandatory licensure relative to certification on wages.
If mandatory licensure reduces competition and lowers welfare, [[beta].sub.3] should be negative and statistically significant.
For the past 35 years, the literature has presented two theories behind the use of mandatory licensure
for professionals: (a) public interest theory and (b) capture theory (also known as acquired theory; Pagliero, 2005; Stigler, 1971).
The reasoning is relatively straightforward and consists in stressing that mandatory licensure gives a monopoly right to the licensed workers or practitioners.
Theoretically, the two sets of arguments are acceptable and therefore a strong (based on mandatory licensure) and a light regulation (based on certification) are both justified.
Thus, a shift from certification to mandatory licensure is likely to have a bigger impact in professions where workers are less skilled than in professions where workers are highly skilled.