Final answer:
The purpose of licensing is to ensure quality standards in various professions by requiring a specific level of education or examination. While creating a standard, it also presents barriers to entry in some industries, affecting competition.
Step-by-step explanation:
The purpose of licensing is to establish a standard of quality within the labor market by ensuring that professionals have attained a specific level of education or have passed required exams. Occupational licenses, usually issued by government agencies, are mandatory for many professions, including doctors, engineers, and teachers, to name a few. In certain states, there are unique licensing requirements for specific jobs, such as a stress analyst in Louisiana or a furniture upholsterer in California.
Typical requirements for obtaining a license include graduating from an accredited program, passing relevant exams like the FE for engineers, gaining a set amount of work experience, and sometimes passing an additional professional examination. Occupational licensing also has the unintended consequence of creating barriers to entry in certain industries, which can limit competition and negatively impact consumer choices.