Occupational Licensing of a Credence Good: The Regulation of Midwifery

A. Frank Adams, Robert B. Ekelund () and John D. Jackson
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A. Frank Adams: Department of Economics, Kennesaw State University
John D. Jackson: Auburn University

Southern Economic Journal, 2003, vol. 69, issue 3, pages 659-675

Abstract: A general theoretical and empirical model of the impact of regulation on supply and demand (prices and quantities) is developed in this paper. The regulation of midwifery services—of certified nurse-midwives (CNMs)—relative to obstetricians (OBs) is analyzed within this framework. Demand-side (quality assurance) effects are distinguished from supply-side (Stigler-Peltzman) effects in the model. Since both unambiguously predict a price increase, we focus on the regulatory impact on quantity. We find, within the empirical model, that while both effects are present, supply-restricting effects dominate quality assurance in the U.S. market for CNM services. When mean regulations are compared to minimum regulations in the sample, CNM births increase from just under 6% of all births to a little over 11%. On net, regulation reduces the quantity of CNM births.

Date: 2003
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Persistent link: http://EconPapers.repec.org/RePEc:sej:ancoec:v:69:3:y:2003:p:659-675

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