Does Regulation Trade Off Quality against Inequality? The Case of German Architects and Construction Engineers

摘要

We exploit an exogenous price increase of 10 per cent for architectural services to answer the question how price regulation affects income inequality and service quality. Using individual-level data from the German microcensus for the years 2006-2012, we find a significant reform effect of 8 per cent on personal net income for self-employed architects and construction engineers. This group moved from the second lowest to the highest quintile of the net income distribution. This increase in inequality is associated with a deterioration of service quality. The reform reduced average scores of a peer ranking for architects by 18 per cent.