Licensing of Physicians: Doctors without International Borders?

Abstract

Re-licensing requirements for immigrant professionals that move across borders are widespread. Surprisingly, however, there is little evidence on the consequences of re-licensing requirements. For example, it is generally not known if substantial re-licensing costs discourage the migration of professionals. Moreover, it is generally not known whether stricter re-licensing requirements help improve the average quality of service in the licensed occupation or whether they simply restrict entry of practitioners and raise their salaries at the expense of consumers.The mass migration of Jews from the former Soviet Union to Israel, which began in late 1989, provides a rare opportunity to add to our knowledge of the consequences of re-licensing requirements. The recent Soviet migration to Israel contained a large number of professionals. In particular, that immigration wave contained an unusually large contingent of Soviet-trained physicians.Using data on the labor-market outcomes of immigrant physicians from the former Soviet Union, collected by the Brookdale Institute in Jerusalem, we examined whether stricter re-licensing requirements merely increase physician salaries or whether they also raise the average quality of service in the medical profession. Interestingly, our results suggest that they increase salaries but without raising the quality of physicians. In fact, our results suggest that a relaxation of re-licensing requirements would actually lead to more talented immigrant physicians choosing to practice medicine in Israel.