Consider a proposed law to deregulate the hair-care industry.Barbers would be allowed to do work previously confined to stylists,and the latter would no longer be required to pass strict licensure exams.Which outcome would you expect to result from this deregulation?

Question

Quizplus · Accepted Answer

Deregulating the hair-care industry would create more competition between barbers and stylists. This would likely lead to a reduction in the economic rent (profits) earned by current stylists, who would face increased competition from barbers. Barbers, on the other hand, may benefit from being able to do more types of work, but this would not necessarily translate into increased economic rent. Beauty school operators may see increased demand for their services as more people enter the industry, but there is no reason to think that this would necessarily increase their economic rent. The option D is unlikely, as displaced stylists might have a hard time finding equally high-paying jobs.

Consider a Proposed Law to Deregulate the Hair-Care Industry