Physicians' Occupational Licensing and the Quantity-Quality Trade-Off

Occupational licensing is a widespread quality regulation that increases the quality of labor but reduces its quantity. We provide a framework to empirically quantify this trade-off and apply it to physician licensing, where both quality and access to care are critical concerns. Using quasi-exogenous variation driven mostly by a recent and unprecedented migration of physicians to Chile, we show that more physicians improve access and patient outcomes in tertiary care, including mortality. We also find that lower quality - as measured by physician performance on the licensing exam - worsens patient outcomes. Building on these findings, we evaluate the implications of locally changing the stringency of the current licensing policy.