The Economics of Dental Licensing.

With few exceptions, occupational licensing has been viewed by economists as a conspiracy of suppliers; they have focused attention almost exclusively on its costs, such as higher prices and restricted opportunities to practice. In this study, an attempt is made to define and test for benefits that might flow from dental licensing. In addition, hypotheses about the determinants of licensing stringency are examined and effects of licensing on the distribution of dentists are investigated. The benefits consumers might realize from the licensing of dentists are: (1) reduced risk of adverse outcomes, (2) reduced cost of acquiring information, and (3) greater satisfaction. Whether these benefits are in fact realized by consumers is subjected to several empirical tests. These tests are based on variation between states in the stringency of licensing. Regression analysis is used to distinguish the effects of licensing from other factors. The study concludes that dental licensing may have certain beneficial effects, and that variation in licensing strengency does not appear to create problems of unequal access to care. Since costs are not estimated, however, or even all benefits, judgment as to whether consumers achieve higher levels of welfare because of licensing must await further research. (Author)