The Fatal Consequences of Brain Drain
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Series
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Speaker(s)Katrine V. Løken (Norwegian School of Economics, Norway)
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FieldEmpirical Microeconomics
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LocationTinbergen Institute, room 1.01
Amsterdam -
Date and time
September 02, 2025
15:30 - 16:30
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. Joint paper with Samuel Dodini, Petter Lundborg, and Alexander Willén.