Doctors Without Borders? Re-Licensing Requirements and Negative Selection in the Market for Physicians

Abstract

Re-licensing requirements for professionals that move across borders are widespread. In this paper, we measure the effects of occupational licensing by exploiting an immigrant physician re-training assignment rule. Instrumental variables and quantile treatment effects estimates indicate large returns to acquiring an occupational license and negative selection into licensing status. We also develop a general model of optimal license acquisition which, together with the empirical results, suggests that stricter re-licensing requirements may not only lead to practitioner rents but also to lower average quality of service in the market for physicians.

Keywords: Occupational Licensing, Immigrant Physicians, Negative Selection

JEL Classification: J24, J31, J44