Working Paper
The Fatal Consequences of Brain Drain
Abstract: We examine the welfare consequences of reallocating high-skilled labor across national 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 administrative data across the two countries and a 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 in Sweden, 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 high-skilled generalists led to more hospitalizations, premature discharges and higher readmission rates. Mortality effects were larger in low-density physician regions and concentrated in older individuals and acute conditions.
JEL Classification: J2; J6; H1;
https://doi.org/10.24149/wp2528
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Bibliographic Information
Provider: Federal Reserve Bank of Dallas
Part of Series: Working Papers
Publication Date: 2025-08-04
Number: 2528