We exploit an exogenous price increase by about 10% for architectural services to answer the question how rice regulation affects income inequality and service quality. Using individual-level data from the German microcensus for the years 2006 to 2012, we find a significant reform effect of 8% 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%.
Regulation Inequality Wages Service Quality Entrepreneurship Natural Experiment