Association for Public Policy Analysis & Management

The economic effects of occupational licensing remains an understudied topic, but even less is known about the effects of removing licensing legislation. In this paper we take advantage of a natural experiment occurring 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. Several efforts have been made to re-license the occupation—most recently with a bill that became law in September 2013. Relying on County Business Patterns data from 1974 to 1994 and a synthetic control design methodology we find that barber de-licensing reduced the annual earnings of barbers and the number of cosmetologist employees per million residents in Alabama. Taken together, our results suggest that licensing was restricting competition in the market for and not improving the quality of hair cutting services in Alabama