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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 D. () (Universitat Pompeu Fabra, CEPR and IZA Bonn)
Sauer, Robert M. (The Hebrew University of Jerusalem)
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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Publisher 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: 43 pages
Date of creation: Nov 2002
Date of revision:
Handle: RePEc:iza:izadps:dp634

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

Find related papers by JEL classification:
D45 - Microeconomics - - Market Structure and Pricing - - - 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, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
J62 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - 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

This paper has been announced in the following NEP Reports:

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