Occupational Licensing, Immigrant Location Choice, and Labor Market Outcomes: Evidence from Refugee Physicians to U.S. States in the 1930s

Kihwan Bae, West Virginia University
Edward Timmons, West Virginia University

Occupational licensing has become one of the most important labor market institutions in the twenty-first century. Currently, above 20% of U.S. workers are required to have an occupational license for their job, which is more than the share of workers in labor unions and those receiving federal minimum wages. However, an occupational license is typically not transferrable across countries so that it may restrict the labor market assimilation of immigrants. In this paper, we study one of the first sets of occupational licensing restriction against immigrant workers. Upon an influx of refugee physicians escaping from Nazism in the 1930s, many U.S. states bumped up medical licensure with additional requirements of U.S. citizenship or a U.S. medical degree, which remain in most states in the twenty-first century. To analyze how the additional restrictions on physician licensure affects the location choice and labor market outcomes of refugee physicians, we first identify 2,198 refugees who are physicians and moved from Western or Eastern Europe to the U.S. in the past five years (“refugee physicians”) of the 1940 Census. Our analysis of the sample shows that refugee physicians are less likely to locate in states with the additional restrictions on medical licensure than refugees in other occupations who might not be affected by the policy. Also, refugee physicians are more likely to settle in rural areas in states without the additional restrictions than they are in states with them, which has a positive implication on healthcare access in rural areas. Conditional on the location choice, we find that having the citizenship or first papers for a citizenship application significantly improves the probability of refugee physicians being employed. Taken together, occupational licensing restrictions against refugee physicians in the 1930s limit their location choice and delay their labor market assimilation.

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 Presented in Session 110. Organizing the Professions