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Doctors without borders: The returns to an occupational license for Soviet immigrant physicians in Israel

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  • Adriana Kugler
  • Robert Sauer

Abstract

Re-licensing requirements for professionals that move across borders are widespread. In this paper, we measure the returns to an occupational license using novel data on Soviet trained physicians that immigrated to Israel. An immigrant re-training assignment rule used by the Israel Ministry of Health provides an exogenous source of variation in re-licensing outcomes. Instrumental variables and quantile treatment effects estimates of the returns to an occupational license indicate excess wages due to occupational entry restrictions and negative selection into licensing status. We develop a model of optimal license acquisition which suggests that the wages of high-skilled immigrant physicians in the nonphysician sector outweigh the lower direct costs that these immigrants face in acquiring a medical license. Licensing thus leads to lower average quality of service. However, the positive earnings effect of entry restrictions far outweighs the lower practitioner quality earnings effect that licensing induces.

Suggested Citation

  • Adriana Kugler & Robert Sauer, 2002. "Doctors without borders: The returns to an occupational license for Soviet immigrant physicians in Israel," Economics Working Papers 648, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:648
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    Cited by:

    1. Angrist, Joshua D. & Guryan, Jonathan, 2008. "Does teacher testing raise teacher quality? Evidence from state certification requirements," Economics of Education Review, Elsevier, vol. 27(5), pages 483-503, October.
    2. Pagliero, Mario, 2013. "The impact of potential labor supply on licensing exam difficulty," Labour Economics, Elsevier, vol. 25(C), pages 141-152.
    3. Cohen-Goldner, Sarit & Paserman, M. Daniele, 2011. "The dynamic impact of immigration on natives' labor market outcomes: Evidence from Israel," European Economic Review, Elsevier, vol. 55(8), pages 1027-1045.
    4. Mario Pagliero, 2007. "The Impact of Potential Labor Supply on Licensing Exam Difficulty in the US Market for Lawyers," CHILD Working Papers wp19_08, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    5. Joshua D. Angrist & Jonathan Guryan, 2004. "Teacher Testing, Teacher Education, and Teacher Characteristics," American Economic Review, American Economic Association, vol. 94(2), pages 241-246, May.

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    More about this item

    Keywords

    Licensing; occupational mobility; regulation; information and product quality; immigration; regression dicontinuity design; quantile regression; quantile treatment effects;
    All these keywords.

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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