Optional Licensing

"Cyn! Guess where I am."
--Tess McGill (Working Girl)

It appears more people are waking up to the downside of mandatory occupational licensing. Far more workers require some form of occupational license today compared to a few decades ago.

As the post observes, this forcible intervention raises cost to consumers. It also serves as a barrier to entry in many fields, which hits low income workers particularly hard.

The merits of optional, rather than mandatory, licensing is discussed. Individuals could legally practice in a profession such as medicine, law, or finance without a license. However, some might choose to achieve certification to signal quality and commitment to the profession. Those without licenses would provide services to those who are less prices sensitive (assuming certified individuals would charge premiums).

Consumers might also be attracted to unlicensed individuals because they may be sources of novel services. Because they are less subject to constraints that may be imposed by licensing institutions, unlicensed providers are more likely to think entrepreneurially and to innovate.

Because mandatory licensing limits the quantity of goods and services available to consumers, relaxing licensing requirements improves standard of living.