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Doctors Without Borders: The Returns to an Occupational License for Soviet Immigrant Physicians in Israel

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Author Info

  • Kugler, Adriana

    ()
    (Georgetown University)

  • Sauer, Robert M.

    ()
    (Royal Holloway, University of London)

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.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 634.

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Length: 44 pages
Date of creation: Nov 2002
Date of revision:
Publication status: published in: Journal of Labor Economics, 2005, 23 (3), 437-466
Handle: RePEc:iza:izadps:dp634

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Keywords: occupational mobility; information and product quality; regulation; licensing; immigration;

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References

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  1. Robert J. LaLonde & Robert H. Topel, 1990. "The Assimilation of Immigrants in the U.S. Labor Markets," NBER Working Papers 3573, National Bureau of Economic Research, Inc.
  2. Richard A. Posner, 1974. "Theories of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 335-358, Autumn.
  3. Weiss, Y. & Gotlibovski, M., 1995. "Immigration, Search and Loss of Kill," Papers 34-95, Tel Aviv.
  4. Joshua Angrist, 1999. "Estimation of Limited-Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Working papers 99-31, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Milton Friedman & Simon Kuznets, 1954. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1, June.
  6. 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.
  7. Alan Krueger, 1999. "From Bismarck to Maastricht: The March to European Union and the Labor Compact," Working Papers 803, Princeton University, Department of Economics, Industrial Relations Section..
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  23. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier.
  24. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-09, January.
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Cited by:
  1. M. Daniele Paserman & Sarit Cohen-Goldner, 2010. "The dynamic impact of immigration on natives' labor market outcomes: Evidence from Israel," Boston University - Department of Economics - Working Papers Series WP2010-046, Boston University - Department of Economics.
  2. Angrist, Joshua & Guryan, Jonathan, 2005. "Does Teacher Testing Raise Teacher Quality? Evidence from State Certification Requirements," IZA Discussion Papers 1500, Institute for the Study of Labor (IZA).

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