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IPFS News Link • Business/ Commerce

Harvard Study Finds Consumers Don't Care if Businesses Are Licensed...

•, Ross Marchand

The already crippling credentialization of the workforce via burdensome and unnecessary occupational licensing laws is hitting workers particularly hard during the coronavirus pandemic, thus making it more difficult for job seekers to find work. Indeed, seemingly reasonable requirements that electricians and healthcare professionals be licensed has given way to ludicrous laws mandating that… adult film starshair braiders, and tree trimmers get the state's seal of approval, stymying workers who are desperate to shift to new vocations in this period of skyrocketing unemployment. Consumers are assured that such onerous requirements lead to more informed choices in a better-structured marketplace, but the evidence doesn't bear this out.

recent study by researchers from MIT, Harvard, Stanford, and Boston University found that consumers care far more about reviews and prices than government-mandated credentials. Occupational licensing does, however, push prices higher, leaving consumers with fewer affordable quality options. These needless rules are particularly harmful for consumers and workers alike in such a difficult period. It's time, then, for lawmakers and bureaucrats to do away with onerous licensing requirements so that employees can get to work faster and consumers can shop around for the best deal.

In their study (released as a working paper in January), the team of four scholars examined data from a large (unnamed) platform "where consumers can hire professionals for home improvement services." Consumers shopping around for professionals can take a look at workers' ratings (along with a 1-5 stars metric), as well as their price and proof of licensure.