Doctors with Borders: Occupational Licensing as an Implicit Barrier to High-Skill Migration

Abstract

Research on the political economy of immigration overlooks the specificity of skills in high skill occupations and its implications for immigration preferences and policymaking. Assessments that skilled Americans are unconcerned about labor market competition from skilled migrants build on a simple dichotomy between high and low skill migrants. In this article we show that natives turn to occupational licensing regulations as occupation-specific, protectionist barriers to skilled migrant labor competition. In practice, high skill natives face labor market competition from only those high-skill migrants who share their occupation-specific skills. Licensure regulations ostensibly serve the public interest by certifying competence but they can simultaneously be formidable barriers to skilled migrants’ labor entry. From a collective action perspective, skilled natives can more easily secure subnational, occupation-specific policies than influence national immigration policy. We exploit the unique structure of the American medical profession that allows us to distinguish between public interest and protectionist motives for migrant physician licensure regulations. We show that over the period 1973-2010 states with greater physician control over licensure requirements imposed more stringent requirements for migrant physician licensure and, as a consequence, received fewer new migrant physicians. By our estimates half of all US states could resolve their physician shortages within five year just by equalizing migrant and native licensure requirements. This article advances research on the political economy of immigration and highlights an overlooked dimension of international economic integration: regulatory rent-seeking as a barrier to the cross-national mobility of human capital, and the public policy implications of such barriers.

Keywords: occupational licensing, rent-seeking, physcian shortages, skill mobility

JEL Classification: J44, I11, I12, I18