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Testimony: Senate Business & Commerce - Occupational Licensing


The Committee’s charges today are important. For a number of years now, TCCRI has taken an interest in occupational licensing in Texas. There is a growing body of evidence that occupational licensing—i.e. requiring the government’s permission in order to pursue a specific occupation or trade—creates negative effects and distortions in the marketplace. Occupational licensing programs are estimated to reduce the rate of job growth by 20 percent and cost between $35 billion and $42 billion per year in decreased competition, higher prices for consumers, reduced job growth, and discouragement of innovation and investment. Evidence suggests that licensed occupations that grew in employment by 10% from 1990 to 2000 would have grown by 12% without the license requirement in place. Research from the National Bureau of Economic Research estimates that state-specific licensing examination requirements may reduce interstate mobility by as much as 36%. A recent report shows that the growth in occupational licensing can decrease economic mobility, as supported by an average of 31 new licenses created in each state over a 20 year period (1993-2012) correlated with a 6.7 percent decline in absolute mobility over that same period.

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