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Competition and Regulation in Professions and Occupations – OECD – June 2024 OECD discussion
The document discusses the varying levels of professional regulation and occupational licensing across different countries, highlighting a significant increase in jobs subject to such regulations in recent decades. It outlines key definitions of professions and licensed occupations, the rationale for regulation, and the potential negative impacts of excessive regulation on competition and consumer outcomes. Furthermore, it emphasizes the role of competition authorities in advocating for pro-competitive practices and the effects of technological innovation on these fields.
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Competition and Regulation in Professions and Occupations – OECD – June 2024 OECD discussion
- 1. Competition and Regulationin Professions and Occupations 10 June 2024 Secretariat Presentation
- 2. Percentage of workforcesubject to professional regulation and occupational licensing Context • There are high levels of variation between countries and within countries of what is regulated • Several member countries have launched major policy reform initiatives to assess the issue and its impact on the economy • There is also renewed interest from competition authorities to be involved in pro-competitive advocacy initiatives across professions and occupations In recent decades and across the OECD, the number of jobs subject to professional regulation or occupational licensing has grown significantly 29% USA 22% EU 18% AUS
- 3. Profession A job deemedto be of sufficient importance to require advanced training, enjoy exclusive rights, and in some cases to be regulated by their own membership Licensed occupation A job which requires individuals who wish to perform certain services to obtain permission from the government or a state authority • There is no universally accepted definition of what constitutes a profession or a licensed occupation • We use the terms interchangeably to refer to any job subject to rules that regulates market entry and behaviour Definitions of key terms
- 4. What does regulationinclude? Market entry • Training and qualifications • Compulsory membership of association • Limits on numbers • Minimum distance between providers Exclusive rights • Restrictions on who can perform activities and services • Reserved use of titles Behavioural rules • Advertising bans or limits • Set fees and discounting bans • Proscribed business structure • Liability and insurance obligations Oversight • State oversight of misconduct • Self- regulation of misconduct • Blended model
- 5. Why regulate? • Characterisesprofessions and occupations as focused on rent-seeking, lobbying and regulatory capture • Service providers monitor each other, erect barriers to entry and place rules on behaviour – undermining competition • Compared to consumer outcomes which are diffuse, professions and occupations are able to lobby on narrow issues, biasing policymakers towards their interests • Information asymmetries as the services provided are experience goods or credence goods • Risk that low quality service will create negative externalities for third parties (e.g. poor medical care creating risk of contagion) • Some public goods may require the ability to access the services of a professional (e.g. conveyancers and the public good of well defined and enforceable property rights) Public interest approach Private interest approach
- 6. Outline 6 The empirical evidenceon professions and occupations Competition advocacy efforts on professions and occupations Technological innovation and new competition in the professions and occupations
- 7. Scan the QRcode to read the background paper