Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/319088 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 17819
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
worker mobility
brain drain
mortality
JEL: 
J2
J6
H1
Document Type: 
Working Paper

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