Tales From the Dentist’s Cartel

Complaining about barber licensing is fun, but the real damage of bad occupational licensing policies is done in the health and education sectors. Here via Adam Ozimek is a study from Morris M. Kleiner and Kyoung Won Park about the economic rents dentists receive in states where dental hygienists aren’t allowed to clean teeth without supervision:

In this study, we examine dentists and dental hygienists, who are both universally licensed and provide complementary services to patients, but may also be substitutes as service providers. We focus on the labor market implications of governmental requirements on permissible tasks and the supervision of hygienists’ activities by dentists. Since there are elements of monopsony in the market we examine, we use the model as a guide for our analysis. We find that states that allow hygienists to be self-employed have about 10 percent higher earnings, and that dentists in those states have lower earnings and slower employment growth. Several sensitivity and falsification tests using other regulated and partially regulated occupations show that our licensing measures are generally robust to alternative specifications. Our estimates are consistent with the view that winning the policy and legal battle in the legislature and courts on the independence of work rules matters in the labor market for these occupations.

The distributive implications among sellers of dental services are of some note (as Ozimek notes, this means that pro-dentist rules distribute income from poorer, femaler hygenists to richer, maler dentists) but the bigger problem here is the increased costs for patients. Clearly there are procedures related to dental health that legitimately require the services of highly trained dentists. But it seems equally clear that there’s a great deal of useful preventive dental health work that cheaper, less-trained hygienists are capable of doing. Allowing them to practice their trade unimpeded would save money and, for the poor, can be the difference between having access to basic dental health services and not having it.