Student Seminar: Doctors With(out) Borders: Effects of Easing Occupational Licensing For Foreign-trained Physicians

Abstract :

Near 25% of U.S. physicians are foreign-trained. Alongside federal immigration policy, states show increasing efforts to facilitate their integration. Yet we know little about whether such policies attract and retain foreign physicians, or about their implications for public health. A key empirical challenge is the lack of policy variation that is both widespread and plausibly exogenous. I study a major wave of state medical licensing reforms for foreign medical graduates (FMGs) from 1960 through the 1970s, when more than 30 state medical boards removed citizenship requirements for licensure. Using a newly digitized individual-level dataset covering all physicians in the US, and a staggered difference-in-differences design based on the quasi-random timing of removing citizenship requirement, I show that these reforms: (1) substantially increase the flow of new licenses to FMGs, raising total licenses granted by nearly 15%; (2) did not translate into a significant increase in the total stock of licensed FMGs; (3) the null stock effects were largely explained by reduced inflows of FMGs migrating from other states and by license renewals/updates among existing in-state FMGs; (4) the effects on licensing flows predominantly occurs after the easing of federal constraints on the transition to permanent residence; and (5) I find no evidence of worsening elderly or infant mortality. Together, these results suggest that lowering licensing barriers is not a panacea for physician shortage: while it resulted in no detectable adverse impacts on public health, it primarily reallocates, rather than expands, the physician workforce and only boosts license flows when federal work authorization is widely accessible.