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Doctors with borders: occupational licensing as an implicit barrier to high skill migration

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Abstract

Research on the political economy of immigration overlooks the specificity of human capital in skilled occupations and its implications for immigration preferences and policymaking. Conclusions that skilled Americans are unconcerned about labor market competition from skilled migrants build on a simple dichotomy between high and low skill migrants. In this article we show that natives turn to occupational licensing regulations as occupation-specific protectionist barriers to skilled migrant labor competition. In practice, high skill natives face labor market competition only from those high-skill migrants who share their occupation-specific skills. Licensure regulations ostensibly serve the public interest by certifying competence, but they can simultaneously be formidable barriers to entry by skilled migrants. From a collective action perspective, skilled natives can more easily secure sub-national, occupation-specific policies than influence national immigration policy. We exploit the unique structure of the American medical profession that allows us to distinguish between public interest and protectionist motives for migrant physician licensure regulations. We show that over the 1973–2010 period states with greater physician control over licensure requirements imposed more stringent requirements for migrant physician licensure and, as a consequence, received fewer new migrant physicians. By our estimates over a third of all US states could reduce their physician shortages by at least 10 percent within 5 years just by equalizing migrant and native licensure requirements. This article advances research on the political economy of immigration and highlights an overlooked dimension of international economic integration: regulatory rent-seeking as a barrier to the cross-national mobility of human capital, and the public policy implications of such barriers.

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Notes

  1. See supplemental appendix for a list of licensed occupations.

  2. Mattoo and Carzaniga (2003. For example, for US hospitals to offshore diagnostic radiology services, foreign radiologists must hold a valid medical license for the state in which the hospital is located. Public safety concerns notwithstanding, countries including the United Kingdom and Singapore impose less stringent licensure requirements for the same activities (Yu and Levy 2010).

  3. The US Department of Health and Human Services defines physician shortage areas as those with a population-to-primary-care-physician ratio of greater than 3,500/1. Several factors contribute to shortages, including inadequate federal funding for graduate medical education, and weak incentives to enter primary care medical specialties and to locate in rural areas. See the supplemental appendix for further details on the measurement of physician shortages (https://dl.dropboxusercontent.com/u/3771432/doctors_licensing_SuppApp.pdf).

  4. Official ISCO-08 statistical definition of professional occupation: “Professionals increase the existing stock of knowledge, apply scientific or artistic concepts and theories, teach about the foregoing in a systematic manner, or engage in any combination of these activities.”

  5. Iversen and Soskice (2001) use an earlier version of the classification to measure skill specificity in a similar manner.

  6. Some skill sets can more easily translate across borders than others. The technical skills of an engineer or a doctor, for example, are likely more portable across national boundaries than those of a lawyer or accountant whose professional expertise is jurisdiction specific.

  7. Facchini and Mayda (2008) and Milner and Tingley (2011) assume factor mobility in their analyses of migration attitudes and policies. Hainmueller and Hiscox (2010) dismiss factor specificity by assuming a small open economy in which all goods are traded such that consumption effects could outweigh wage competition. Their reasoning does not hold when skill-specific protection is possible. Further, as we note, the only high-skill occupations are professional services, which frequently are nontraded. Inattention to skill specificity is probably also responsible for indeterminate findings on the labor market effects of migration.

  8. To some extent, the definition of occupational categories for the purposes of regulation is endogenous to lobbying because regulatory boards issue “scope of practice guidelines” that draw boundaries where functional overlap occurs in occupational tasks (e.g., nurse practitioners and physicians).

  9. See Carpenter (1996) and Wood and Waterman (1991) on funding as a form of legislative control over agencies.

  10. Historically, states frequently prohibited non-citizens from obtaining medical licenses regardless of where they were educated; however, most states eliminated these regulations in the 1970s after the US Supreme Court ruled them unconstitutional (Plascencia et al. 2003). Figure 2 suggests that IMG licensure requirements grew more stringent as a replacement for outlawed citizenship requirements.

  11. To take the exams, IMGs must provide proof that they graduated from a foreign medical school listed in the International Medical Education Directory, a list maintained by the US Educational Commission for Foreign Medical Graduates. The directory includes foreign medical schools that are accredited by their respective governments. This requirement provides another quality screen.

  12. With the exception of Canada, prior experience in foreign countries does not count toward this requirement.

  13. The system of post-graduate residency is almost entirely federally funded. The number of slots has been somewhat fixed since 1996, when Congress froze funding for additional slots.

  14. On patient health outcomes, see Norcini et al. (2010). On disciplinary actions, see Morrison and Wickersham (1998). Indeed, non-citizen IMGs consistently outperform US citizen/permanent resident IMGs at every stage of assessment described. To the extent that the latter group more clearly signals poor quality by the inability to gain admission to a US school, this pattern further establishes the effectiveness of foreign IMG quality screening.

  15. Svorny and Toma (1998). State legislatures tend to defer—even in matters of legislation—to their state medical boards and departments of health. Medical boards often assist in writing bills considered by lawmakers. Changes to a state’s medical practice act rarely are contentious, though professional organizations do lobby (see, e.g., c.f 1999 Alaska Senate Bills 71 and 29).

  16. Earlier licensure data are available, but our sample is constrained by the availability of other variables. See the supplemental appendix for details regarding data sources. https://dl.dropboxusercontent.com/u/3771432/doctors_licensing_SuppApp.pdf.

  17. Although institutional features are not randomly assigned, medium- and long-term concerns guide legislators in bureaucratic agency design (Epstein and O’Halloran 1996; Lewis 2003). The vast majority of state medical boards were created between 1870 and 1915. Because financing structures established early in a board’s history persist over time, they should be orthogonal to other salient board and state characteristics during our sample period. As an example of this persistence, a strong correlation exists between self-financing in 1952 and during our sample period (Council of State Governments 1952: p. 80). More broadly, states with self-financed licensing boards for other professions are more likely to have self-financed medical boards, suggesting that idiosyncratic factors early in a board’s history shape institutional design, rather than profession-specific considerations (ibid.).

  18. These categories are identified by the DHS. New admittees enter on a temporary or permanent visa. Adjustments of status are conversions to permanent legal residence. DHS identifies the occupation of a legal migrant upon his or her entry into the United States. For adjustments of status, the DHS uses the immigrant’s occupation prior to the individual becoming a legal permanent resident.

  19. We utilized data covering 1973–2008 from DHHS. Data for 2009 and 2010 were gathered separately and harmonized with this longer time series. See the supplemental appendix for a detailed discussion of data sources used to construct our variables. https://dl.dropboxusercontent.com/u/3771432/doctors_licensing_SuppApp.pdf.

  20. Models estimated by OLS provide identical results in terms of statistical significance and very similar results with regard to the substantive impact of board independence.

  21. See supplemental appendix for all summary statistics.

  22. We obtain similar results if we use the difference in requirements between IMGs and US medical graduates as our dependent variable.

  23. Results available upon request.

  24. A small percentage of candidates are matched outside of this process.

  25. Polsky et al. (2002). Medical licenses are not transferrable across states. In order to practice in another state, physicians must apply for a new medical license. Trainees benefit from a network and sources of information about potential opportunities, which reduce the transaction costs involved in finding employment locally.

  26. See Li et al. (2000) and Coren (2007). Residents also cite educational and career-development benefits from moonlighting (Hunt et al. 1992).

  27. Silliman et al. (1987) and Li et al. (2000). Even where residency programs prohibit or limit moonlighting, these rules tend to be enforced weakly (Li, Tabor and Martinez 2000).

  28. See, e.g., Silliman et al. (1987). IMGs typically are older, more likely to have dependents, and less likely to have a family support network nearby, which suggests that IMGs would moonlight at high rates (Gozu et al. 2009). At the same time, IMGs are less heavily indebted, which may make them less likely to moonlight (Gozu et al. 2009; Silliman et al. 1987).

  29. IMGs are less likely to be board certified than their US-trained counterparts (Akl et al. 2007).

  30. Systematic data on physicians who did not complete residency are limited, but one survey of rural departments of emergency medicine indicated that approximately 20 % of their staff physicians were residents-in-training. More importantly, a further 19 % of staff physicians had not completed residency and were no longer enrolled in residency programs (authors’ calculations based on McGirr et al. 1998: pp. 333–335). A variety of placement companies and websites cater to physicians who did not complete residency. These organizations list both clinical and non-clinical positions, particularly in biomedical research and allied health professions (Yoo et al. 2009).

  31. Even with disaggregated data, we would probably be unable to identify most of the parameters because most IMGs in the United States originate from approximately 20 countries.

  32. Entry into the United States through educational/work visas, and the accompanying documentation from their US sponsors, ensures that these migrants are physicians as the occupation is defined in the United States. It is possible that migrants entering on family reunification visas self-report as physicians and therefore appear in our data. Non-practicing physicians in our data do not bias our results, because their state-location choice should not correlate with the stringency of state physician licensing.

  33. https://dl.dropboxusercontent.com/u/3771432/doctors_licensing_SuppApp.pdf.

  34. The expected increase in foreign physicians into a state correlates highly with the degree of physician shortage it faces (ρ = 0.77).

  35. These estimates must be interpreted with caution. We have no way of accounting for attrition if foreign-trained physicians leave the state after completing their training or if additional physicians—either foreign or domestically trained—migrate to the state in question.

  36. States to the left of the line may have political environments that are hostile to undocumented workers—something that may proxy for the overall desirability of a state from the point of a view of a foreign-born individual. This area is left for future research.

  37. Our estimates of reduced emergency department visits compare favorably to other highly-touted healthcare reforms, such as the introduction of High Deductible Health Plans (HDHPs) with Health Savings Accounts. Based on estimates of the impact of HDHPs (Wharam et al 2007), equalizing licensure requirements for native and foreign-educated physicians would reduce emergency department visits as much as enrolling an additional 2.5 million American in HDHPs, or an 18.5 percent increase in current HDHP enrollment. See the supplemental appendix for a detailed explanation of these cost estimates. https://dl.dropboxusercontent.com/u/3771432/doctors_licensing_SuppApp.pdf.

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Acknowledgments

For their assistance with data collection, we are grateful to John Simanski and Michael Hoeferin of the Office of Immigration Statistics, US Department of Homeland Security, and Amber Dushman of the American Medical Association. We gratefully acknowledge financial support from the University of Virginia’s Bankard Fund for Political Economy and Quantitative Collaborative Seed Grant Initiative. For their thoughtful feedback and suggestions, we thank the editors of Public Choice, two anonymous reviewers, Christina Davis, Gary Freeman, Tim Garson, Jason Hicks, Eric Patashnik, Craig Volden, Gay Wehrli, Casey White, and participants at the 2012 Midwest Political Science Association and International Political Economy Society meetings.

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  1. Department of Politics, University of Virginia, PO Box 400787, Charlottesville, VA, 22904, USA

    Brenton D. Peterson, Sonal S. Pandya & David Leblang

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  1. Brenton D. Peterson
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Correspondence to Sonal S. Pandya.

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Peterson, B.D., Pandya, S.S. & Leblang, D. Doctors with borders: occupational licensing as an implicit barrier to high skill migration. Public Choice 160, 45–63 (2014). https://doi.org/10.1007/s11127-014-0152-8

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