1.What effects do licensure and certification--in which individuals must purchase licenses to show that they have a particular set of qualifications-have on particular labor markets?

Worker certification does not deter final consumers from purchasing services, but licensing does restrict service providers from hiring uncertified workers, raising wages for those service providers who hold licenses. Also, under certification, workers face the choice of purchasing that particular signal for employment and thus raising their wages, or not purchasing the license and thus risking their chances for employment. Thus, in states or counties that require licensing, individuals face barriers to entering the licensed professions.

2.How does licensure affect the elasticity of labor supply in particular service markets? Why?

Elasticity should fall-thus the labor supply curve will become more inelastic.

3.How does licensure affect the distribution of worker vs. provider surplus in service markets in which licenses are required? Indicate this with a graph of supply and demand.

Licenses redistribute surplus away from service providers and towards licensed workers. Labor supply will fall and also become more inelastic, favoring higher wages, and lowering producer surplus for those businesses providing the service.

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