Relaxing Occupational Licensing Requirements: Analyzing Wages and Prices for a Medical Service

Occupational licensing laws have been relaxed in a large number of US states to give nurse practitioners the ability to perform more tasks without the supervision of medical doctors. We investigate how these regulations affect wages, hours worked, and the prevailing transaction prices and quality levels associated with certain types of medical services. We find that when nurse practitioners have more independence in their scope of practice, their wages are higher but physicians’ wages are lower, which suggests some substitution between the occupations. Our analysis of insurance claims data shows that more rigid regulations increase the price of a well-child visit by 3–16 percent. However, we find no evidence that the changes in regulatory policy are reflected in outcomes that might be connected to the quality and safety of health services.