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Does regulation trade-off quality against inequality? The case of German architects and construction engineers

Davud Rostam-Afschar and Kristina Strohmaier

No 23-2018, Hohenheim Discussion Papers in Business, Economics and Social Sciences from University of Hohenheim, Faculty of Business, Economics and Social Sciences

Abstract: We exploit an exogenous price increase by about 10% for architectural services to answer the question how price regulation affects income inequality and service quality. Using individual-level data from the German microcensus for the years 2006 to 2012, we find a significant reform effect of 8% on personal net income for self-employed architects and construction engineers. This group moved from the second lowest to the highest quintile of the net income distribution. This increase in inequality is associated with a deterioration of service quality. The reform reduced average scores of a peer ranking for architects by 18%.

Keywords: Regulation; Inequality; Wages; Service Quality; Entrepreneurship; Natural Experiment (search for similar items in EconPapers)
JEL-codes: L5 L11 L74 J44 L26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lma
Date: 2018
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Working Paper: Does Regulation Trade-Off Quality against Inequality? The Case of German Architects and Construction Engineers (2018) Downloads
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