New Books in Economics

Rebecca Haw Allensworth, "The Licensing Racket: How We Decide Who Is Allowed to Work, and Why It Goes Wrong" (Harvard UP, 2025)

Feb 12, 2025

Rebecca Haw Allensworth, a Professor of Law at Vanderbilt University and expert on professional licensing, dives into the intricacies of labor regulation. She discusses how professional licensing can create significant economic barriers, often driven by conflicts of interest on licensing boards. The conversation critiques the balance between protecting public safety and hindering access to professions. Allensworth also touches on the failures of these boards, the impact on healthcare access, and the need for systemic reforms to improve accountability and consumer protection.

55:28

Episode guests

Rebecca Haw Allensworth

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Quick takeaways

Professional licensing creates significant barriers to entry, limiting access for qualified individuals and exacerbating provider shortages in critical fields like healthcare.

The structure of licensing boards often conflicts with their regulatory role, as professional members face challenges in impartially overseeing their peers, leading to inadequate accountability measures.

Deep dives

The Impact of Professional Licensing

Professional licensing significantly affects access to various professions, often restricting entry for qualified individuals. Licensing boards, which are generally composed of members from the profession, tend to impose strict regulations that create barriers, reducing competition and increasing costs of services. This regulatory setup has been shown to exclude capable providers, particularly in critical areas like healthcare, exacerbating issues such as a lack of access to care in underserved communities. As evidenced by the stringent requirements for certain roles, such as alcohol and drug abuse counselors, the overregulation in many areas leads to a scarcity of providers, adversely impacting public health.

Intro

4min

The Trade-offs of Professional Licensing

18min

Examining the Power and Limitations of Licensing Boards

2min

Challenges in Professional Licensing

21min

The Importance of Understanding Regulatory Systems in Consumer Protection

2min

Navigating Local Red Tape: The Real Impact of Licensing Regulations

2min

Exploring Antitrust and Literary Inspirations

3min

When we think about "red tape" and the cost of regulation it's hard to overstate the impact of professional licensing. According to Professor Rebecca Haw Allensworth, it's bigger than unions and more expensive than sales taxes.

Millions of American workers are required - by law - to obtain a license in order to work. This barrier of entry depends on requirements set by licensing boards staffed mainly by members of the profession they oversee. It limits the number of people who can serve and also confers on licensees a certain degree of prestige and trust.

In The Licensing Racket: How We Decide Who Is Allowed to Work, and Why It Goes Wrong (Harvard UP, 2025), Allensworth goes deep into a complex web of conflicting priorities.

Whether it's hair stylists or doctors, plumbers or lawyers, licensing board members are asked to simultaneously represent their personal practice, fellow professionals, and the public. They have to literally "wear three hats", which leads to well-intentioned, but deeply flawed and biased, decision making.

Consumers depend on licensing boards to ensure that professionals maintain high quality and reliability standards by creating - and enforcing - licensing standards.

In reality, their decisions can be maddeningly arbitrary, creating unnecessary barriers to hopeful practitioners while simultaneously failing to protect the public from bad actors who abuse the trust placed in them.

Despite good intent, board members lack the resources and sometimes the will to investigate even serious disciplinary cases. The consequences include, but are not limited to, the failure of medical licensing boards to remove the abusive doctors who fueled the opioid crisis and a system that allows unethical predatory lawyers to continue to practice, often targeting clients who are unable to protect themselves.

While in some areas licensing is deeply flawed, in others it is critical to a well-functioning society. Allensworth argues for abolition where appropriate and reform where it is most needed.

See Professor Allensworth's faculty profile video

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