Wenni Yang

Job Market Paper: “Doctors With(out) Borders: Effects of Easing Occupational Licensing for Foreign-trained Physicians”Latest Draft

Does restricting the entry of physicians affect our physician supply and delivery of care? This paper studies how easing licensing requirements for non-U.S.-citizen physicians affects the physician supply, hospital capacity and utilization, and population mortality. From 1960 through the 1970s, more than thirty states removed citizenship requirements for medical licensure. Using novel licensure and physician data that I digitized from historical records, I show that easing a licensing requirement changes physician supply through expanding entry into licensing. It also increases the share of licensed physicians among the total physician stock, all with no detectable crowd-out of the U.S.-trained physicians. Considering quality, I find little evidence of higher mortality rates or negative selection into licensing in physician quality, measured by the average license exam pass rate of each licensed cohort. Hospitals respond by expanding staffed beds by about 4 percent. Bed expansion is concentrated in areas with growing demand for health care, i.e., among counties with above-median Medicaid exposure. Heterogeneity analysis across calendar years shows both license flow and bed expansion emerged in years after the federal government expanded access to permanent residency for J-1 visa holders in 1970, consistent with federal visa policy being a complementary barrier for foreign-trained physicians. Together, these findings suggest that licensing barriers unrelated to clinical qualifications can restrict entry into practice and limit hospital capacity, particularly where demand for care is growing.