Date:
Location:
How Does Occupational Licensing Impact Consumer Search on Digital Platforms?
Peter Q. Blair, Assistant Professor of Education, Harvard Graduate School of Education
Abstract: Using data from a digital marketplace that converts customer search into sales leads, we measure how licensing requirements facing service providers on the platform impact consumer search. Our key outcome is the share of consumer search requests with at least one provider purchasing the lead, which we term the “accept rate.” Leveraging a law change in New Jersey and exploiting many quasi-random experiments in licensing laws within local labor markets that straddle counties on state borders, we find that licensing causally reduced the accept rate by 11 p.p. (16%) and 14 p.p. (25%), respectively. Further, we estimate causal semi-elasticities of search volume (-0.001), labor supply (-0.115), sales lead price (-0.038), and the number of service providers sold a given lead (-0.118) with respect to licensing. We demonstrate in a search model that these semi-elasticities provide sufficient statistics for welfare. We find that licensing reduces service provider surplus (37%) and platform surplus (28%) without increasing consumer surplus. In the select cases where we also observe customer ratings and prices, licensing is associated with a 1.1% increase in service quality and a 9.8% increase in prices.
Peter Q. Blair is currently a National Fellow at the Hoover Institution. He is on the faculty at the Harvard Graduate School of Education where he co-directs the Project on Workforce. He serves as a faculty research fellow of the National Bureau of Economic Research (NBER) and the principal investigator of the BE-Lab — a research group with partners from Harvard University, Clemson University, and University of Illinois Urbana-Champaign. His group’s research focuses on the link between the future of work and the future of education, labor market discrimination, occupational licensing, and residential segregation. Blair received his Ph.D. in applied economics from the Wharton School at the University of Pennsylvania, his M.Sc. in theoretical physics from Harvard University, and his B.Sc. in physics and mathematics from Duke University. He is the youngest of his parents’ seven sons, and got his start understanding markets by selling fruit and vegetables in the Bahamas in the Nassau Straw Market with his brothers.
