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The Fatal Consequences of Brain Drain

Author

Listed:
  • Dodini, Samuel

    (Federal Reserve Bank of Dallas)

  • Lundborg, Petter

    (Lund University)

  • Loken, Katrine Vellesen

    (Norwegian School of Economics)

  • Willén, Alexander

    (Norwegian School of Economics)

Abstract

This paper examines the welfare consequences of reallocating high-skilled labor across borders. A labor demand shock in Norway—driven by a surge in oil prices—substantially increased physician wages and sharply raised the incentive for Swedish doctors to commute across the border. Leveraging linked register data and a dose-response difference-in-differences design, we show that this shift doubled commuting rates and significantly reduced Sweden’s domestic physician supply. The result was a persistent rise in mortality, with no corresponding health gains in Norway. These effects were unevenly distributed, disproportionately harming certain places and populations. The underlying mechanism was a severe strain on Sweden’s healthcare system: shortages of young, high-skilled generalists led to more hospitalizations, premature discharges, higher readmission rates, and delayed care. Mortality effects were larger in low-density physician regions and concentrated in older individuals and acute conditions—circulatory, respiratory, and infectious diseases. Our findings show that even temporary, intensive-margin shifts in skilled labor can generate large and unequal welfare losses when public services are already capacity-constrained.

Suggested Citation

  • Dodini, Samuel & Lundborg, Petter & Loken, Katrine Vellesen & Willén, Alexander, 2025. "The Fatal Consequences of Brain Drain," IZA Discussion Papers 17819, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp17819
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    More about this item

    Keywords

    worker mobility; brain drain; mortality;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • H1 - Public Economics - - Structure and Scope of Government

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