We find that licensing a task reduces service provider surplus and platform surplus without increasing consumer surplus

From Does Angi Recommend Occupational Licensing? by Alex Tabarrok.  Based on first economic principles, if you restrict supply, you increase cost.  There can be justifications, usually of a quality of safety nature to restrict supply based on licensing or regulation but clearly that should be done in a context where the increased cost is in balance with the improved safety/quality.

Regrettably, few or none restrictive licensing or regulatory schemes perform that calculation.  They simply assume that with licensing/regulation, the increase in cost will inherently be more than offset by improved satisfaction with quality and increased safety.

A brave assumption.

Particularly given that regulatory capture is a constant challenge and given that licensing/regulation to restrict supply functionally looks a lot like guilds and unions.  Beneficial for the owners/agents but usually not for the consumer.

The primary new research Tbarrok references is Does Occupational Licensing Reduce Value Creation on Digital Platforms? by Peter Q. Blair and Mischa Fisher

From the Abstract:

We test whether occupational licensing undercuts a key goal of digital marketplaces— to increase social surplus by increasing the effectiveness of customer search. Our setting is a large online marketplace in the $500B home services industry where a platform converts customer search into sales leads that are accepted for purchase by service providers on the platform. For each of the 21 million observations in our data set, we observe task-level variation in the state licensing requirements that service providers must meet to operate on the platform. Exploiting two natural experiments, we find that licensing reduces the accept rate of sales leads by an average of 25 percent. The accept rate drops because licensing reduces the aggregate labor supply of workers on the platform and not because licensing increases the volume of customer search. We develop a model and derive analytic expressions for the impact of licensing on the welfare of consumers, service providers and the platform as a function of seven sufficient statistics which we estimate from the data. We find that licensing a task reduces service provider surplus and platform surplus without increasing consumer surplus.

Restricting supply through licensing and regulation decreases choice and would appear to increase inefficiency (taking longer to find providers).

This matches one of the most consistent differences I have experienced for forty years between the US and UK.  The UK has a much stronger labor union tradition than the US, a lot more market regulation, and a lot more licensing.  The consequence is that almost regardless what the project might be, painting a house, adding a sun room, rehabbing the kitchen, etc. it takes two to four times as long in the UK and costs twice as much.  

There is probably more going on in that comparison than just licensing and regulation but it is part and parcel of the scleroticism that infects planned and managed economies.  Small increases in inefficiency, cost, and delay begin adding up.

The researchers conclude:

The existing literature on licensing on digital platforms, which consists of three other papers, has carefully measured the impact of licensing on consumer satisfaction and safety by demonstrating that customer self-reports of service quality and objective platform measures of service provider safety do not increase in the presence of licensed service providers, despite the positive impact of licensing on prices (Hall et al., 2019; Farronato et al., 2020; Deyo, 2022). 

[snip]

A general insight from our work is that occupational licensing reduces some of the efficiency gains from moving labor to digital platforms. The reduction in labor supply that we estimate for our online marketplace is similar to the reductions in labor supply due to licensing in offline markets (Blair and Chung, 2019; Kleiner and Soltas, 2019). Taken together, our findings and those from the three others papers studying licensing in digital labor markets indicate that the traditional view of licensing espoused in Friedman (1962) about licensing in offline markets, i.e, licensing is a labor market restriction with limited benefits, also holds in digital labor markets (Hall et al., 2019; Farronato et al., 2020; Deyo, 2022). Our work provides a clear example where labor market regulations developed to govern the analogy economy work against the efficiency gains that technological innovation promises to bring in a digital economy (Goldfarb et al., 2015)

 

So no one gains from the supposed benefits of licensing/regulation and everyone loses.  Sounds like much of public policy but interesting to see it beginning to be quantified.  Not the last word on the issue by any means but it is certainly a case of evidence matching theory.