Professionals and populists: the making of a free market for medicine in the United States, 1787–1860

Abstract

In the early decades of the 19th century, physicians in the USA enjoyed unquestioned authority in medicine and increasing state recognition. But by mid-century, their monopoly had given way to a raucous free market for medical care. To explain the causes and consequences of this dismantling of a professional monopoly, we draw on political sociology. We argue that to maintain a monopoly, a dominant profession must defend its cultural authority against rival claims and preserve its institutional support from the state. A dominant profession can lose its monopoly if rival occupations mobilize to challenge its cultural authority and if populist political coalitions mobilize to repeal laws upholding professional monopolies. Our analysis, which covers all states in the Union by 1860, reveals that the dynamics of contention, both within the system of professions and in the wider political arena, can erode the foundations of professional monopolies.

Who Profits from Occupational Licensing?

“…Furthermore, we need not expect an immediate effect of licensing on wages if we drop the assumption of a stock-exchange-like wage mechanism connecting licensing and wages. Increases in bargaining power and influences on prices can be a result of long-lasting struggles between occupations spanning decades (Habinek and Haveman 2019).…”

“…Licensed occupations represent the only legitimate supply source for a set of services or products. They also represent relevant actors in the process of determining the prices of these products—in some cases simply because licensed persons are self-employed or the CEOs of organizations (Dingwall and Fenn 1987; Habinek and Haveman 2019). High prices for occupational tasks and products, in combination with high bargaining power, would thus result in substantial wage advantages.…”

Who profits from occupational licensing?

“…Furthermore, we do not need to expect an immediate effect of licensing on wages if we drop the assumption stock-exchange-like wage mechanism connecting licensing and wages. Increases in bargaining power and influences on prices can be a result of long-lasting struggles between occupations spanning decades (Habinek and Haveman 2019).…”

“…Licensed occupations represent the only legitimate source of supply for a set of services or products. They also represent relevant actors in the process of determining the prices of these productsin some cases simply because licensed persons are self-employed or are the CEOs of organizations (Dingwall and Fenn 1987;Habinek and Haveman 2019). High prices for occupational tasks and products, in combination with high bargaining power, would thus result in substantial wage advantages.…”

Institutional variation in occupational licensing and its consequences for wages. A distributional analysis for the USA and Germany.

“…The newly licensed occupations studied by Redbird (2017) are most likely to be low-and medium-wage occupations with lower status and power resources than classic professions . Habinek and Haveman (2019) show for the U.S. medical market how important occupational power is to maintain monopolies against rival occupations.…”