There and Back Again: The De‐Licensing and Re‐Licensing of Barbers in Alabama
| DOI | http://doi.org/10.1111/bjir.12438 |
| Date | 01 December 2019 |
| Published date | 01 December 2019 |
| Author | Robert J. Thornton,Edward J. Timmons |
British Journal of Industrial Relations doi: 10.1111/bjir.12438
57:4 December 2019 0007–1080 pp. 764–790
There and Back Again: The De-Licensing
and Re-Licensing of Barbers in Alabama
Edward J. Timmons and Robert J. Thornton
Abstract
The economic eects of occupational licensing remain an understudied topic,but
even less is known about the eects of the removal of licensing legislation. In this
article, we take advantage of a natural experiment that occurred in the state of
Alabama. Alabama was the last state to begin licensing barbers in 1973 and also
the only state to de-license barbers(in 1983). Relying on data from 1974 to 1994,
we find evidence that barber de-licensing reduced the average annual earnings of
barbers as well as the number of cosmetologist employeesper million residents in
Alabama, although not all our results are statistically significant. We also find
evidence that de-licensing resulted in small increases in the number of barber
shops and decreases in the number of cosmetology shops in Alabama. In recent
decades, a number of attempts have been made to re-license the occupation —
most recently with a barber licensing bill that became law in September 2013.
The result is that barbering in Alabama is once again a licensed occupation.
Our limited evidence suggests that the re-licensing of barbers in Alabama may
already have had an eect on pay and on the number of barber shops.
1. Introduction
Occupational licensing is a significant labour market institution both in the
United States and abroad.For example, Koumentaand Pagliero (2018) found
that occupational licensing aects 22 per cent of the European Union’s
labour force. Recent estimates of the percentage of workers in the US labour
force who require a license to practise range from 22 per cent (Department
of Labor 2018) to 29 per cent (Kleiner and Krueger 2013). In any case,
occupational licensing’sgrowth has become a national concern. A white paper
published by the White House in the summer of 2015 recommends that
state policymakers reconsider the costs and benefits of occupationallicensing,
Edward J. Timmons is in the School of Business at St. FrancisUniversity. Robert J. Thornton is
in the Department of Economics at Lehigh University.
With apologies forthe title to J.R.R. Tolkien.
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2018 John Wiley & Sons Ltd.
There and Back Again 765
inasmuch as licensing can substantially reduce total employment in licensed
occupations (Department of the Treasury 2015). Although much is still to be
learned regarding the economic eects of occupational licensing, even less is
known about the economic eects of the removal of such licensing — what
we shall refer to as ‘de-licensing’. One reason for this lack of knowledge is
the relative infrequency of successful de-licensing eorts. While more and
more occupations have become licensed as of late (e.g. fire eaters and pet
groomers in a few states), in a recentpaper, we were ableto uncover only eight
cases of de-licensing in the United States in the last 40 years (Thornton and
Timmons 2015). In this article, we examineone of the cases identified: barbers
in Alabama.
Until 1973, Alabama was the only state that did not license barbers. In
that year, a statewide barber licensing law took eect and lasted for the next
10 years. After the law expired in 1983, Alabama barbers were again free
to practise their trade with few restrictions. We rely on this unique natural
experiment to estimate the economic eects of de-licensing of barbers in
Alabama. We should stress that ours is one of the first studies to estimate the
economic eects of the de-licensing of any occupation in the United States.
We first compare barbers’ earnings, the number of barbers and the number
of barber shops in Alabama with the corresponding numbers in other
Southern states during the period 10 years beforeand 10 years after Alabama’s
de-licensing took eect. We also compare how barber de-licensing may have
aected the earnings and numbers of a closely related service profession —
cosmetologists.
We then try to ascertain what would have happened to the barbering and
cosmetology markets in Alabamahad de-licensing not taken place in 1983. To
do so, we utilize the synthetic controlmethod (Synth) originally introduced by
Abadie and Gardeazabal (2003) and later expanded by Abadie et al. (2010).
For this purpose, we construct a ‘synthetic Alabama’, with Synth picking
non-negative weights to attach to control states so that synthetic Alabama
resembles actual Alabama as closely as possible prior to the start of de-
licensing in 1983. The synthetic control method has been used in several
other labour market contexts: for example, estimating the eects of right-to-
work laws (Eren and Ozbeklik 2016) and of comparable worth (pay equity)
legislation (McDonald and Thornton 2015).
It is important to note that seven Alabama counties continued to license
barbers even after mandatory statewide barber licensing ended in 1983. We
therefore examine to what extent the continued licensing of barbers in these
counties may have aected our estimates.
Finally, as of 2013 Alabama has once again instituted mandatory licensing
of the barbering profession. We attempt to see whether any eects on barber
wages and barber numbersmay already haveoccurred, even though the period
of time since the reinstitution of licensing has been short.
The plan of the article is as follows. In the next section (Section 2), we
briefly review the relatively few studies of the eects of licensing of barbers
and cosmetologists (two nearly universally licensed occupations) on wages
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2018 John Wiley& Sons Ltd.
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