Our Self-Imposed Doctor Shortage

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There are some good reasons to think the much-hyped doctor shortage won’t come to pass, but insofar as this is something people are worried about, it would be very easy to fix it through free trade. Politicians and economists always tout free trade as a remedy to high prices in sectors of the US economy that employ  low-wage, low-status people, and they’re basically right about that. It totally works to lower prices. But what’s good for the goose is good for the gander, and  there’s no reason to think free trade wouldn’t also work for the medical and legal professions.

Here’s a hot new paper by Brendan Peterson, Sonal Pandya, and David Leblang exploring the idea that we could fix our doctor shortage by importing more doctors:

Skills are often occupation-specific, a fact missing from existing research on the political economy of immigration. Although analyses of survey data suggest broad support for skilled migration occupational licensing regulations persist as formidable barriers to skilled migrants’ labor market entry. Regulations ostensibly serve the public interest by certifying competence but are simultaneously rent-preserving entry barriers. We analyze both the sources of US states’ licensure requirements for international medical graduates (IMGs), and the effect of these regulations on migrant physicians’ choice of US state in which to work over the period 1973-2010. Analysis of original data shows that states with self-financing state medical licensing boards, which can more easily be captured by incumbent physicians, have more stringent IMG licensure requirements. Additionally, we find that states that require IMGs to complete longer periods of supervised training receive fewer migrants. Our empirical results are robust to controls for states’ physician labor market. This research identifies an overlooked dimension of international economic integration: implicit barriers to the cross-national mobility of human capital, and the public policy implications of such barriers.

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