Policy Seminar with Brad Larsen

Wednesday, February 17, 2016
George Shultz Conference Room, Herbert Hoover Memorial Building
Brad Larsen, David Brady, John Cogan, Matthew Gentzkow, Tom Gilligan, Rick Hanushek, Laurie Hodrick, Tim Kane, Ed Lazear, David Mauler, George Shultz, John Taylor
Brad Larsen, Assistant Professor of Economics at Stanford University, discussed his work on “Occupational Licensing and Quality: Distributional and Heterogeneous Effects in the Teaching Profession.”
Larsen first described the increased prevalence of occupational licensing in the US. Proponents argue that licensing protects consumers whereas opponents argue that licensing restricts competition. Existing studies have found that licensing has a negative effect or no effect, either on the quality of candidates entering the occupation or the quality of the services they provide. However, such studies are limited to focusing on the average quality for the average consumer. Larsen explained how his research generalizes this framework by examining the entire distribution along both dimensions.
Larsen then described how he uses the teaching profession to examine distributional effects of licensing. Specifically, he exploits variation in states’ teacher licensing requirements, together with a measure of teacher qualifications (input quality) and student outcomes (output quality). Larsen’s empirical results indicate that more restrictive certification requirements for teachers might cause some high-quality first-year teachers to leave the occupation. However, for teachers who remain in the occupation, stricter requirements increase teacher quality uniformly across the quality distribution. Furthermore, stricter requirements are associated with a widening of the distribution of student test scores, or output quality. Larsen also considers the role of income – he finds evidence that input and output quality improvements tend to occur in high-income districts as compared to low-income districts.

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