Skip to main content

Advertisement

SpringerLink
Log in

The economic theory of regulation and inequality

  • Published:
Public Choice Aims and scope Submit manuscript

Abstract

Stigler (Bell J Econ Manag Sci 2:3–21, 1971) proposed that regulation benefits politically influential interest groups rather than advancing the public interest. The Stiglarian perspective predicts that regulation raises barriers to entry that limit competition and creates economic rents for incumbents. Apart from the direct economic harm of such policies, regulation generates additional consequences. One hypothesized consequence ushered by anticompetitive rules is the widening of income disparities. This article therefore surveys the growing empirical literature that studies whether regulation ultimately exacerbates income inequality. Beginning with the literature on entry and start-up regulation, we find that these rules, as predicted by Stigler, limit entry and dampen entrepreneurship. Moreover, recent studies also indicate that these regulations are associated with higher income inequality. We also review the literature on occupational licensure. Consistent with Stigler (Bell J Econ Manag Sci 2:3–21, 1971), the literature chronicles widespread use of barriers to entry in labor markets, which have documented regressive effects on the distribution of income. Finally, we review research on financial regulation, in which studies have shown that some financial regulations are associated with less entrepreneurship and higher income inequality. Taken together, the recent empirical literature buttresses and extends the implications in Stigler (Bell J Econ Manag Sci 2:3–21, 1971). Regulation tends to benefit incumbents by limiting entry of economic participants, be it firms or workers, and exacerbates income inequality.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. With respect to the loss of real output and income resulting from government regulation, the literature contains two important papers. The first, Dawson and Seater (2013), finds that US federal regulations (proxied by way of page counts in the US Code of Federal Regulations) reduced US economic growth by two percentage points between 1949 and 2005, resulting in a $38.8 trillion loss of real output over the period. The second, Coffey et al. (2020), finds that US federal regulations (as measured by RegData) trimmed US economic growth by about 0.8 percentage points between 1997 and 2012. They estimate that if regulations had been frozen between 1980 and 2012, the US economy would have been 25% larger ($4 trillion) than it actually was by 2012.

  2. For example, Geloso and March (2021) suggest that rent seeking by mental health providers helps to explain the increase in mental health institutionalizations between 1870 and 1910.

  3. The extent to which the pattern holds is still debated; see, for instance, Geloso and Magness (2020) and Mechling et al. (2017).

  4. See McLaughlin and Sherouse (2019) for methodological details related to the construction of RegData.

  5. New startups formed because of a lack of other options are considered a form of necessity entrepreneurship. In contrast, opportunity entrepreneurship is “associated with growth-oriented, procyclical activity” (Dove, 2020). See (Fairlie & Fossen, 2020) for a full exposition.

  6. Consistent with public choice theory, measures of cronyism have been shown to be related empirically to income inequality. Shughart et al. (2003) find that states with more influential special-interest groups also have higher levels of income inequality. Assuming that the volume of legislation and regulations beneficial to special interest groups increases with their influence, the finding is consistent with other papers that report a positive relationship between regulation and income inequality.

  7. For a descriptive study of the extent and cost of occupational licensure in the United States, see Carpenter et al. (2018).

  8. See Vaheesan and Pasquale (2018) for a critique of the economic analysis of occupational licensure.

  9. Evidence on the effect of licensing on minority groups is mixed and disputed (Klein et al., 2012; Law & Marks, 2009). Licensing may reduce the probability that new teachers are Hispanic (Angrist & Guryan, 2008), increase the wages of minority nurses (Law & Marks, 2017) and reduce the labor supply more for white men than for black men (Blair & Chung, 2019). McLaughlin et al. (2013) review the earlier literature.

  10. See Claessens and Perotti (2007) for a review of the earlier literature.

  11. Christopoulos and McAdam (2017) find that financial regulation does not stabilize income inequality.

References

  • Agnello, L., Mallick, S. K., & Sousa, R. M. (2012). Financial reforms and income inequality. Economics Letters, 116(3), 583–587. https://doi.org/10.1016/j.econlet.2012.06.005

    Article  Google Scholar 

  • Alesina, A., & Perotti, R. (1996). Income distribution, political instability, and investment. European Economic Review, 40(6), 1203–1228.

    Article  Google Scholar 

  • Alesina, A., & Rodrik, D. (1994). Distributive politics and economic growth. Quarterly Journal of Economics, 109, 465–490.

    Article  Google Scholar 

  • Amici, M., Giacomelli, S., Manaresi, F., & Tonello, M. (2016). Red tape reduction and firm entry: New evidence from an Italian reform. Economics Letters, 146, 24–27. https://doi.org/10.1016/j.econlet.2016.06.031

    Article  Google Scholar 

  • Anderson, G. M. (2000). Regulatory barriers to entry in the healthcare industry: The case of alternative medicine. Quarterly Review of Economics and Finance, 40(4), 485–502.

    Article  Google Scholar 

  • Anderson, D. M., Brown, R., Charles, K. K., & Rees, D. I. (2020). Occupational licensing and maternal health: Evidence from early midwifery laws. Journal of Political Economy, 128(11), 4337–4383. https://doi.org/10.1086/710555

    Article  Google Scholar 

  • Angrist, J. D., & Guryan, J. (2008). Does teacher testing raise teacher quality? Evidence from state certification requirements. Economics of Education Review, 27(5), 483–503. https://doi.org/10.1016/j.econedurev.2007.03.002

    Article  Google Scholar 

  • Ardagna, S., & Lusardi, A. (2010). Heterogeneity in the effect of regulation on entrepreneurship and entry size. Journal of the European Economic Association, 8(2–3), 594–605. https://doi.org/10.1111/j.1542-4774.2010.tb00529.x

    Article  Google Scholar 

  • Ashby, N. J., & Sobel, R. S. (2008). Income inequality and economic freedom in the US states. Public Choice, 134(3–4), 329–346.

    Article  Google Scholar 

  • Aspergis, N., Dincer, O., & Payne, J. E. (2014). Economic freedom and income inequality revisited: Evidence from a panel correction model. Contemporary Economic Policy, 32, 67–74.

    Article  Google Scholar 

  • Bagchi, S., & Sivadasan, J. (2017). Barriers to entry and competitive behavior: Evidence from reforms of cable franchising regulations. Journal of Industrial Economics, 65(3), 510–558.

    Article  Google Scholar 

  • Barro, R. J. (2000). Inequality and growth in a panel of countries. Journal of Economic Growth, 5, 5–32.

    Article  Google Scholar 

  • Bailey, J. B., & Thomas, D. W. (2017). Regulating away competition: The effect of regulation on entrepreneurship and employment. Journal of Regulatory Economics, 52(3), 237–254. https://doi.org/10.1007/s11149-017-9343-9

    Article  Google Scholar 

  • Bailey, J. B., Thomas, D. W., & Anderson, J. R. (2019). Regressive effects of regulation on wages. Public Choice, 180(1), 91–103. https://doi.org/10.1007/s11127-018-0517-5

    Article  Google Scholar 

  • Banerjee, A., & Duflo, E. (2003). Inequality and growth: What can the data say? Journal of Economic Growth, 8, 267–299.

    Article  Google Scholar 

  • Beck, T., Demirguc-Kunt, A., Laeven, L., & Levine, R. (2008a). Finance, firm size, and growth. Journal of Money, Credit and Banking, 40(7), 1379–1405. https://doi.org/10.1111/j.1538-4616.2008.00164.x

    Article  Google Scholar 

  • Beck, T., Demirgüç-Kunt, A., Peria, M., & Soledad, M. (2008b). Banking services for everyone? Barriers to bank access and use around the world. The World Bank Economic Review, 22(3), 397–430. https://doi.org/10.1093/wber/lhn020

    Article  Google Scholar 

  • Beck, T., Levine, R., & Levkov, A. (2010). Big Bad Banks? The winners and losers from bank deregulation in the United States. The Journal of Finance, 65(5), 1637–1667. https://doi.org/10.1111/j.1540-6261.2010.01589.x

    Article  Google Scholar 

  • Benabou, R. (1996). Heterogeneity, stratification, and growth: Macro implications of community structure and school finance. American Economic Review, 86, 584–609.

    Google Scholar 

  • Bennett, D. L., & Nikolaev, B. (2017). On the ambiguous economic freedom-inequality relationship. Empirical Economics, 53(2), 717–754.

    Article  Google Scholar 

  • Bennett, D. L., & Vedder, R. K. (2013). A dynamic analysis of economic freedom and income inequality in the 50 US states: Empirical evidence of a parabolic relationship. Journal of Regional Analysis & Policy, 43(1), 42–55.

    Google Scholar 

  • Bertola, G. (1993). Factor shares and savings in endogenous growth. American Economic Review, 83, 1184–1198.

    Google Scholar 

  • Blair, P. Q., & Chung, B. W. (2019). How much of barrier to entry is occupational licensing? British Journal of Industrial Relations, 57(4), 919–943.

    Article  Google Scholar 

  • Blau, B. M. (2018). Income inequality, poverty, and the liquidity of stock markets. Journal of Development Economics, 130, 113–126. https://doi.org/10.1016/j.jdeveco.2017.10.006

    Article  Google Scholar 

  • Blau, B. M., Brough, T. J., & Thomas, D. W. (2013). Corporate lobbying, political connections, and the bailout of banks. Journal of Banking & Finance, 37(8), 3007–3017. https://doi.org/10.1016/j.jbankfin.2013.04.005

    Article  Google Scholar 

  • Branstetter, L., Lima, F., Taylor, L. J., & Venâncio, A. (2014). Do entry regulations deter entrepreneurship and job creation? Evidence from recent reforms in Portugal. The Economic Journal, 124(577), 805–832. https://doi.org/10.1111/ecoj.12044

    Article  Google Scholar 

  • Bripi, F. (2016). The role of regulation on entry: Evidence from the Italian provinces. World Bank Economic Review, 30(2), 383–411.

    Article  Google Scholar 

  • Calderón, C., & Chong, A. (2009). Labor market institutions and income inequality: An empirical exploration. Public Choice, 138(1–2), 65–81. https://doi.org/10.1007/s11127-008-9339-1

    Article  Google Scholar 

  • Carpenter, D. M., Knepper, L., Sweetland, K., & McDonald, J. (2018). The continuing burden of occupational licensing in the United States. Economic Affairs, 38(3), 380–405. https://doi.org/10.1111/ecaf.12319

    Article  Google Scholar 

  • Chambers, D., Collins, C. A., & Krause, A. (2019a). How do federal regulations affect consumer prices? An analysis of the regressive effects of regulation. Public Choice, 180(1), 57–90. https://doi.org/10.1007/s11127-017-0479-z

    Article  Google Scholar 

  • Chambers, D., & Guo, J.-T. (2021). Employment and output effects of federal regulations on small business. Pacific Economic Review. https://doi.org/10.1111/1468-0106.12353

    Article  Google Scholar 

  • Chambers, D., & Krause, A. (2010). Is the relationship between inequality and growth affected by physical and human capital accumulation? Journal of Economic Inequality, 8, 153–172.

    Article  Google Scholar 

  • Chambers, D., McLaughlin, P. A., & Sherouse, O. (2020). Regulation, entrepreneurship, and dynamism (Mercatus Working Paper). https://www.mercatus.org/publications/regulation/regulation-entrepreneurship-and-dynamism-0.

  • Chambers, D., McLaughlin, P. A., & Stanley, L. (2019b). Regulation and poverty: An empirical examination of the relationship between the incidence of federal regulation and the occurrence of poverty across the US states. Public Choice, 180(1), 131–144. https://doi.org/10.1007/s11127-018-0603-8

    Article  Google Scholar 

  • Chambers, D., McLaughlin, P. A., & Stanley, L. (2019c). Barriers to prosperity: The harmful impact of entry regulations on income inequality. Public Choice, 180(1), 165–190. https://doi.org/10.1007/s11127-018-0498-4

    Article  Google Scholar 

  • Chambers, D., & Munemo, J. (2019). Regulations, institutional quality and entrepreneurship. Journal of Regulatory Economics, 55(1), 46–66.

    Article  Google Scholar 

  • Chambers, D., & O’Reilly, C. (2019). Entry regulations and income inequality at the regional level. Journal of Regional Analysis & Policy, 49(1), 31–39.

    Google Scholar 

  • Chambers, D., & O’Reilly, C. (2020). Regulation and income inequality in the United States (Mercatus Working Paper). https://doi.org/10.2139/ssrn.3636126

  • Christopoulos, D., & McAdam, P. (2017). Do financial reforms help stabilize inequality? Journal of International Money and Finance, 70, 45–61. https://doi.org/10.1016/j.jimonfin.2016.05.003

    Article  Google Scholar 

  • Ciccone, A., & Papaioannou, E. (2007). Red tape and delayed entry. Journal of the European Economic Association, 5(2–3), 444–458.

    Article  Google Scholar 

  • Claessens, S., & Perotti, E. (2007). Finance and inequality: Channels and evidence. Journal of Comparative Economics, 35(4), 748–773. https://doi.org/10.1016/j.jce.2007.07.002

    Article  Google Scholar 

  • Coffey, B., McLaughlin, P. A., & Peretto, P. (2020). The cumulative cost of regulations. Review of Economic Dynamics, 38, 1–21. https://doi.org/10.1016/j.red.2020.03.004

    Article  Google Scholar 

  • Dawson, J. W., & Seater, J. J. (2013). Federal regulation and aggregate economic growth. Journal of Economic Growth, 18(2), 137–177. https://doi.org/10.1007/s10887-013-9088-y

    Article  Google Scholar 

  • de Haan, J., & Sturm, J.-E. (2017). Finance and income inequality: A review and new evidence. European Journal of Political Economy, 50, 171–195. https://doi.org/10.1016/j.ejpoleco.2017.04.007

    Article  Google Scholar 

  • Delis, M. D., Hasan, I., & Kazakis, P. (2014). Bank regulations and income inequality: Empirical evidence. Review of Finance, 18(5), 1811–1846.

    Article  Google Scholar 

  • Demirguc-Kunt, A., & Levine, R. (2009). Finance and inequality: Theory and evidence. Annual Review of Financial Economics, 1(1), 287–318.

    Article  Google Scholar 

  • Dhawan, R., & Guo, J.-T. (2001). Declining share of small firms in US output: Causes and consequences. Economic Inquiry, 39(4), 651–662. https://doi.org/10.1093/ei/39.4.651

    Article  Google Scholar 

  • Djankov, S. (2002). The regulation of entry. Quarterly Journal of Economics, 117(1), 1–37.

    Article  Google Scholar 

  • Djankov, S. (2009). The regulation of entry: A survey. The World Bank Research Observer, 24(2), 183–203.

    Article  Google Scholar 

  • Djankov, S., Georgieva, D., & Ramalho, R. (2018). Business regulations and poverty. Economics Letters, 165, 82–87. https://doi.org/10.1016/j.econlet.2018.02.002

    Article  Google Scholar 

  • Dolar, B., & Shughart, W. F. (2007). The wealth effects of the USA Patriot Act: Evidence from the banking and thrift industries. Journal of Money Laundering Control, 10(3), 300–317. https://doi.org/10.1108/13685200710763470

    Article  Google Scholar 

  • Dolar, B., & Shughart, W. F. (2012). The USA Patriot Act’s differential impact on large and small banks: Evidence from California’s high-risk money laundering and related financial crime areas. Journal of Banking Regulation, 13(2), 127–146. https://doi.org/10.1057/jbr.2011.22

    Article  Google Scholar 

  • Dove, J. A. (2020). Opportunity entrepreneurship and regulation: A state-level analysis. Applied Economics Letters, 27(12), 987–991.

    Article  Google Scholar 

  • Fairlie, R. W., & Fossen, F. M. (2020). Defining opportunity versus necessity entrepreneurship: Two components of business creation. In S. W. Polachek & K. Tatsiramos (Eds.), Change at home, in the labor market, and on the job (Vol. 48, pp. 253–289). Emerald Publishing Limited. https://doi.org/10.1108/S0147-912120200000048008

    Chapter  Google Scholar 

  • Farronato, C., Fradkin, A., Larsen, B., & Brynjolfsson, E. (2020). Consumer protection in an online world: An analysis of occupational licensing (NBER Working Paper No. w26601). National Bureau of Economic Research. https://doi.org/10.3386/w26601

  • Federman, M. N., Harrington, D. E., & Krynski, K. J. (2006). The impact of state licensing regulations on low-skilled immigrants: The case of Vietnamese manicurists. American Economic Review, 96(2), 237–241.

    Article  Google Scholar 

  • Forbes, K. J. (2000). A reassessment of the relationship between inequality and growth. American Economic Review, 90(4), 869–887.

    Article  Google Scholar 

  • Friedman, M. (1962). Capitalism and freedom. University of Chicago Press.

    Google Scholar 

  • Galor, O., & Moav, O. (2004). From physical to human capital accumulation: Inequality and the process of development. The Review of Economic Studies, 71(4), 1001–1026.

    Article  Google Scholar 

  • Galor, O., & Zeira, J. (1993). Income distribution and macroeconomics. Review of Economic Studies, 60, 35–52.

    Article  Google Scholar 

  • Geloso, V., & Magness, P. (2020). The Great Overestimation: Tax data and inequality measurements in the United States, 1913–1943. Economic Inquiry, 58(2), 834–855. https://doi.org/10.1111/ecin.12865

    Article  Google Scholar 

  • Geloso, V., & March, R. J. (2021). Rent seeking for madness: The political economy of mental asylums in the United States, 1870 to 1910. Public Choice. https://doi.org/10.1007/s11127-021-00890-1

    Article  Google Scholar 

  • Gittleman, M., Klee, M. A., & Kleiner, M. M. (2018). Analyzing the labor market outcomes of occupational licensing. Industrial Relations, 57(1), 57–100.

    Article  Google Scholar 

  • Gittleman, M., & Kleiner, M. M. (2016). Wage effects of unionization and occupational licensing coverage in the United States. ILR Review, 69(1), 142–172. https://doi.org/10.1177/0019793915601632

    Article  Google Scholar 

  • Goldschlag, N., & Tabarrok, A. (2018). Is regulation to blame for the decline in American entrepreneurship? Economic Policy, 33(93), 5–44. https://doi.org/10.1093/epolic/eix019

    Article  Google Scholar 

  • Gorry, D., & Thomas, D. W. (2017). Regulation and the cost of childcare. Applied Economics, 49(41), 4138–4147. https://doi.org/10.1080/00036846.2016.1276275

    Article  Google Scholar 

  • Greenwood, J., & Jovanavic, B. (1990). Financial development, growth and the distribution of income. Journal of Political Economy, 98, 1076–1107.

    Article  Google Scholar 

  • Gutiérrez, G., & Philippon, T. (2019). The Failure of Free Entry (NBER Working Paper No. w26001). National Bureau of Economic Research. https://doi.org/10.3386/w26001

  • Hall, J. C., & Lawson, R. A. (2014). Economic freedom of the world: An accounting of the literature. Contemporary Economic Policy, 32(1), 1–19.

    Article  Google Scholar 

  • Heinemann, F., & Schüler, M. (2004). A Stiglerian view on banking supervision. Public Choice, 121(1–2), 99–130. https://doi.org/10.1007/s11127-004-5437-x

    Article  Google Scholar 

  • Helland, E., & Matsuno, M. (2003). Pollution abatement as a barrier to entry. Journal of Regulatory Economics, 24(2), 243–259.

    Article  Google Scholar 

  • Holcombe, R. G., & Boudreaux, C. J. (2016). Market institutions and income inequality. Journal of Institutional Economics, 12(2), 263–276.

    Article  Google Scholar 

  • Hotz, V. J., & Xiao, M. (2011). The impact of regulations on the supply and quality of care in child care markets. American Economic Review, 101(5), 1775–1805. https://doi.org/10.1257/aer.101.5.1775

    Article  Google Scholar 

  • Ingram, S. J. (2019). Occupational licensing and the earnings premium in the United States: Updated evidence from the Current Population Survey. British Journal of Industrial Relations, 57(4), 732–763.

    Article  Google Scholar 

  • Jaumotte, M. F., & Osorio, M. C. (2015). Inequality and labor market institutions. (IMF Staff Discussion Note 15/14). International Monetary Fund.

  • Johnson, J. E., & Kleiner, M. M. (2020). Is occupational licensing a barrier to interstate migration? American Economic Journal: Economic Policy, 12(3), 347–373.

    Google Scholar 

  • Kerr, W. R., & Nanda, R. (2009). Democratizing entry: Banking deregulations, financing constraints, and entrepreneurship. Journal of Financial Economics, 94(1), 124–149.

    Article  Google Scholar 

  • Klapper, L., Laeven, L., & Rajan, R. (2006). Entry regulation as a barrier to entrepreneurship. Journal of Financial Economics, 82(3), 591–629. https://doi.org/10.1016/j.jfineco.2005.09.006

    Article  Google Scholar 

  • Klein, D. B., Powell, B., & Vorotnikov, E. S. (2012). Was occupational licensing good for minorities? A critique of Marc Law and Mindy Marks. Econ Journal Watch, 9(3), 210–233.

    Google Scholar 

  • Kleiner, M. M., & Krueger, A. B. (2013). Analyzing the extent and influence of occupational licensing on the labor market. Journal of Labor Economics, 31(2), S173–S202. https://doi.org/10.1086/669060

    Article  Google Scholar 

  • Kleiner, M. M., & Kudrle, R. T. (2000). Does regulation affect economic outcomes? The case of dentistry. Journal of Law and Economics, 43(2), 547–582.

    Article  Google Scholar 

  • Kleiner, M. M., Marier, A., Park, K. W., & Wing, C. (2016). Relaxing occupational licensing requirements: Analyzing wages and prices for a medical service. Journal of Law and Economics, 59(2), 261–291.

    Article  Google Scholar 

  • Kleiner, M. M., & Vorotnikov, E. (2017). Analyzing occupational licensing among the states. Journal of Regulatory Economics, 52(2), 132–158.

    Article  Google Scholar 

  • Kleiner, M. M., & Xu, M. (2020). Occupational licensing and labor market fluidity (No. w27568). National Bureau of Economic Research. https://doi.org/10.3386/w27568

  • Koumenta, M., & Pagliero, M. (2019). Occupational regulation in the European Union: Coverage and wage effects. British Journal of Industrial Relations, 57(4), 818–849.

    Article  Google Scholar 

  • Kufenko, V., & Geloso, V. (2020). Who are the champions? inequality, economic freedom and the Olympics. Journal of Institutional Economics, 17(3), 1–17.

    Google Scholar 

  • Kugler, A. D., & Sauer, R. M. (2005). Doctors without Borders? Relicensing requirements and negative selection in the market for physicians. Journal of Labor Economics, 23(3), 437–465. https://doi.org/10.1086/430283

    Article  Google Scholar 

  • Larsen, B., Ju, Z., Kapor, A., & Yu, C. (2020). The effect of occupational licensing stringency on the teacher quality distribution (No. w28158). National Bureau of Economic Research. https://doi.org/10.3386/w28158

  • Lambert, T. (2018). Lobbying on regulatory enforcement actions: Evidence from US commercial and savings banks. Management Science, 65(6), 2545–2572. https://doi.org/10.1287/mnsc.2017.2895

    Article  Google Scholar 

  • Law, M. T., & Kim, S. (2005). Specialization and regulation: The rise of professionals and the emergence of occupational licensing regulation. The Journal of Economic History, 65(3), 723–756.

    Article  Google Scholar 

  • Law, M. T., & Marks, M. S. (2009). Effects of occupational licensing laws on minorities: Evidence from the Progressive Era. The Journal of Law and Economics, 52(2), 351–366. https://doi.org/10.1086/596714

    Article  Google Scholar 

  • Law, M. T., & Marks, M. S. (2017). The labor-market effects of occupational licensing laws in nursing. Industrial Relations: A Journal of Economy and Society, 56(4), 640–661. https://doi.org/10.1111/irel.12190

    Article  Google Scholar 

  • Li, J., & Yu, H. (2014). Income inequality and financial reform in Asia: The role of human capital. Applied Economics, 46(22–24), 2920–2935.

    Article  Google Scholar 

  • Li, H., & Zou, H.-F. (1998). Income inequality is not harmful for growth: Theory and evidence. Review of Development Economics, 2, 318–334.

    Article  Google Scholar 

  • Manish, G. P., & O’Reilly, C. (2019). Banking regulation, regulatory capture and inequality. Public Choice, 180(1), 145–164. https://doi.org/10.1007/s11127-018-0501-0

    Article  Google Scholar 

  • Manish, G. P., & O’Reilly, C. (2020). Financial regulation and income inequality. Quarterly Journal of Finance and Accounting, 58(8), 33–52.

    Google Scholar 

  • McLaughlin, P. A., Ellig, J., & Shamoun, D. Y. (2013). Regulatory reform in Florida: An opportunity for greater competitiveness and economic efficiency. Florida State University Business Review, 13, 95–130.

    Google Scholar 

  • McLaughlin, P. A., & Sherouse, O. (2019). RegData 2.2: A panel dataset on US federal regulations. Public Choice, 180(1), 43–55. https://doi.org/10.1007/s11127-018-0600-y

    Article  Google Scholar 

  • McLaughlin, P. A., Smith, A. C., & Sobel, R. S. (2019). Bootleggers, Baptists, and the risks of rent seeking. Constitutional Political Economy, 30(2), 211–234. https://doi.org/10.1007/s10602-019-09278-2

    Article  Google Scholar 

  • McMichael, B. J. (2017). The demand for healthcare regulation: The effect of political spending on occupational licensing laws. Southern Economic Journal, 84(1), 297–316.

    Article  Google Scholar 

  • Mechling, G., Miller, S., & Konecny, R. (2017). Do Piketty and Saez misstate income inequality? Critiquing the Critiques. Review of Political Economy, 29(1), 30–46. https://doi.org/10.1080/09538259.2017.1255439

    Article  Google Scholar 

  • Moehling, C. M., Niemesh, G. T., Thomasson, M. A., & Treber, J. (2020). Medical education reforms and the origins of the rural physician shortage. Cliometrica, 14(2), 181–225. https://doi.org/10.1007/s11698-019-00187-w

    Article  Google Scholar 

  • Mulholland, S. E. (2019). Stratification by regulation: Are bootleggers and Baptists biased? Public Choice, 180(1), 105–130. https://doi.org/10.1007/s11127-018-0597-2

    Article  Google Scholar 

  • Mulholland, S. E., & Young, A. T. (2016). Occupational licensing and interstate migration. Cato Journal, 36(1), 17–31.

    Google Scholar 

  • Olson, M. (1965). The logic of collective action: public goods and the theory of groups. Harvard University Press.

    Google Scholar 

  • Oyèkólá, Ọ. (2021). Finance and inequality in a panel of US States. Empirical Economics. https://doi.org/10.1007/s00181-020-01976-3

  • Peltzman, S. (1976). Toward a more general theory of regulation. The Journal of Law & Economics, 19(2), 211–240.

    Article  Google Scholar 

  • Perotti, R. (1993). Political equilibrium, income distribution and growth. Review of Economic Studies, 60, 755–776.

    Article  Google Scholar 

  • Persson, T., & Tabellini, G. (1994). Is inequality harmful for growth? Theory and evidence. American Economic Review, 84, 600–621.

    Google Scholar 

  • Peterson, B. D., Pandya, S. S., & Leblang, D. (2014). Doctors with Borders: Occupational licensing as an implicit barrier to high skill migration. Public Choice, 160(1–2), 45–63.

    Article  Google Scholar 

  • Piketty, T., & Saez, E. (2003). Income inequality in the United States, 1913–1998. The Quarterly Journal of Economics, 118(1), 1–41. https://doi.org/10.1162/00335530360535135

    Article  Google Scholar 

  • Piketty, T., & Saez, E. (2007). Income and wage inequality in the United States, 1913–2002. In Top incomes over the twentieth century: A contrast between Continental European and English-speaking countries. OUP Oxford.

  • Pizzola, B., & Tabarrok, A. (2017). Occupational licensing causes a wage premium: Evidence from a natural experiment in Colorado’s funeral services industry. International Review of Law and Economics, 50, 50–59.

    Article  Google Scholar 

  • Rostam-Afschar, D. (2014). Entry regulation and entrepreneurship: A natural experiment in German craftsmanship. Empirical Economics, 47(3), 1067–1101. https://doi.org/10.1007/s00181-013-0773-7

    Article  Google Scholar 

  • Rozema, K. (2021). Occupational licensing and legal services: Evidence from diploma privileges and lawyer sanctions (SSRN Scholarly Paper No. ID 3612481). Social Science Research Network. https://doi.org/10.2139/ssrn.3612481

  • Runst, P., Thomä, J., Haverkamp, K., & Müller, K. (2019). A replication of ‘Entry regulation and entrepreneurship: A natural experiment in German craftsmanship.’ Empirical Economics, 56(6), 2225–2252. https://doi.org/10.1007/s00181-018-1457-0

    Article  Google Scholar 

  • Schaumans, C., & Verboven, F. (2008). Entry and regulation: Evidence from health care professions. The RAND Journal of Economics, 39(4), 949–972. https://doi.org/10.1111/j.1756-2171.2008.00045.x

    Article  Google Scholar 

  • Shakya, S., & Plemmons, A. (2020). Does scope of practice affect mobility of nurse practitioners serving medicare beneficiaries? Journal of Labor Research, 41(4), 421–434. https://doi.org/10.1007/s12122-020-09308-1

    Article  Google Scholar 

  • Shapiro, C. (1986). Investment, moral hazard, and occupational licensing. The Review of Economic Studies, 53(5), 843–862. https://doi.org/10.2307/2297722

    Article  Google Scholar 

  • Shughart, W. F., Tollison, R. D., & Yan, Z. (2003). Rent seeking into the income distribution. Kyklos, 56(4), 441–456. https://doi.org/10.1046/j.0023-5962.2003.00232.x

    Article  Google Scholar 

  • Skarbek, D. (2008). Occupational licensing and asymmetric information: Post-hurricane evidence from Florida. Cato Journal, 28(1), 73–82.

    Google Scholar 

  • Sturm, J.-E., & de Haan, J. (2015). Income inequality, capitalism, and ethnolinguistic fractionalization. American Economic Review, 105(5), 593–597.

    Article  Google Scholar 

  • Stigler, G. J. (1971). The theory of economic regulation. The Bell Journal of Economics and Management Science, 2(1), 3–21. https://doi.org/10.2307/3003160

    Article  Google Scholar 

  • Stiglitz, J. E. (2012). The price of inequality: How today’s divided society endangers our future (1st ed.). W. W. Norton & Company.

    Google Scholar 

  • Timmons, E. J. (2017). The effects of expanded nurse practitioner and physician assistant scope of practice on the cost of Medicaid patient care. Health Policy (amsterdam, Netherlands), 121(2), 189–196. https://doi.org/10.1016/j.healthpol.2016.12.002

    Article  Google Scholar 

  • Timmons, E. J., & Konieczny, C. (2018). Untangling hair braider deregulation in Virginia. Cato Journal, 38(3), 679–699.

    Google Scholar 

  • Timmons, E. J., & Mills, A. (2018). Bringing the effects of occupational licensing into focus: Optician licensing in the United States. Eastern Economic Journal, 44(1), 69–83.

    Article  Google Scholar 

  • Timmons, E. J., & Thornton, R. J. (2008). The effects of licensing on the wages of radiologic technologists. Journal of Labor Research, 29(4), 333–346.

    Article  Google Scholar 

  • Traczynski, J., & Udalova, V. (2018). Nurse practitioner independence, health care utilization, and health outcomes. Journal of Health Economics, 58, 90–109. https://doi.org/10.1016/j.jhealeco.2018.01.001

    Article  Google Scholar 

  • Vaheesan, S., & Pasquale, F. (2018). The politics of professionalism: Reappraising occupational licensure and competition policy. Annual Review of Law and Social Science, 14(1), 309–327. https://doi.org/10.1146/annurev-lawsocsci-112116-014728

    Article  Google Scholar 

  • Yandle (2021). George J. Stigler’s theory of economic regulation, bootleggers, Baptists and the rebirth of the public interest imperative. Public Choice.

  • Zapletal, M. (2019). The effects of occupational licensing: Evidence from business-level data. British Journal of Industrial Relations, 57(4), 894–918.

    Article  Google Scholar 

  • Zhang, T. (2019). Effects of occupational licensing and unions on labour market earnings in Canada. British Journal of Industrial Relations, 57(4), 791–817.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics and Finance, Salisbury University, Salisbury, MD, USA

    Dustin Chambers

  2. Institute for Economic Inquiry, Department of Economics and Finance, Creighton University, Omaha, NE, USA

    Colin O’Reilly

Authors
  1. Dustin Chambers
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Colin O’Reilly
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Colin O’Reilly.

Ethics declarations

Conflict of interest

The authors declare that they have no conflict of interest.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Chambers, D., O’Reilly, C. The economic theory of regulation and inequality. Public Choice 193, 63–78 (2022). https://doi.org/10.1007/s11127-021-00922-w

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11127-021-00922-w

Keywords

JEL Classification

Search

Navigation