Occupational Licensing of a Credence Good: The Regulation of Midwifery

1. Introduction Occupational licensing is as old as trade. Estimates are that in the United States alone, at least 800 occupations require some form of "license to practice" (Rottenberg 1980, p. 2). Midwifery is most certainly among the oldest occupations known to Homo sapiens, and, unsurprisingly, it has been the subject of licensing regulations over the 20th century. There has been, however, a marked reemergence of the practice over the past 20 years in the United States. After nearly being driven from existence by physicians in the early part of the 20th century, the percentage of midwife attended births has risen from 0.9% of all births in 1975 to 5.95% of all births in 1995. This latter figure translates into 231,921 midwife-attended births for the year 1995. Of this figure, CNMs attended 94.3%, or 218,613, births. A number of factors account for this resurgence, including women's expression of their right to choose birth practitioners and place of birth, increased political expression of that right, and the escalating costs of traditional childbirth services by obstetricians (OBs) and hospitals (Butter and Kay 1988). In contrast, midwife-attended births account for a full 75% of all births in Europe, with far lower infant and maternal mortality rates reported (Coburn 1997). Midwives are classified into two basic categories in this country: lay midwife and certified nurse-- midwife (CNM). Lay midwives typically receive no formal educational training but are clinically trained through apprenticeships. On the other hand, a CNM "is a registered nurse with advanced training in midwifery who possesses evidence of certification by the American College of Nurse-- Midwives (ACNM)" (Adams 1989, p. 1038). The practice of nurse-midwifery, as defined by the ACNM, is "the independent management of care of essentially normal newborns and women, antepartally (before birth), intrapartally (during birth), postpartally (after birth) and/or gynecologically ... within a health care system which provides for medical consultation, collaborative management, and referral" (Safriet 1992, p. 425). The causes and effects of state regulation that determines the extent of professional independence from physicians of advanced practice nurses (APNs) has been analyzed by Dueker et al. (2000) for the same general period we employ. Advanced practice nursing, however, includes nurse practitioners, clinical nurse specialists, and nurse anesthetists as well as CNMs. Dueker et al. (2000) suggest that, for this larger category of nurse specialists, APN earnings are lower and physicians assistants earnings are higher in states where APNs have attained higher levels of professional independence (measured in part by prescriptive authority).1 Midwifery has been included, along with other heath care professions, in interesting studies of the impact of the composition of public licensing boards on particular occupational requirements (Graddy and Nichol 1989; Graddy 1991), but (to the best of our knowledge) midwifery has not been isolated in any study of effects of regulation(s).2 The purpose of this paper is thus to analyze empirically the economic impact of alternative forms of regulation within the state markets for midwife services. Certified nurse-midwives are formally recognized by the American College of Obstetricians and Gynecologists (ACOG) and are now able to practice legally in all 50 states including the District of Columbia, but CNMs practice under significant and significantly different regulations that limit their scope of practice and constrain their use by women (DeVries 1985) within the 50 states. There are suggestions in the literature that the severity of regulations at the state level-a partial product of past pressure by the medical establishment (OBs in particular--has had deleterious effects in the market for midwives' services. However, there has been (again to the best of our knowledge) no empirical support for such propositions or an analysis of the particular impact of alternative regulations. …