The Fatal Consequences of Brain Drain

Samuel Dodini, Petter Lundborg (), Katrine Løken and Alexander Willén ()
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Petter Lundborg: Dept. of Economics, Lund University, Postal: Lund University, Department of Economics, SE-220 07 Lund, Sweden, https://sites.google.com/site/atpetterlundborg/
Alexander Willén: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway, https://www.alexanderwillen.com/

No 9/2025, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

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 administrative 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.

Keywords: Brain Drain; Worker Mobility; Mortality (search for similar items in EconPapers)
JEL-codes: H11 J12 J16 (search for similar items in EconPapers)
Pages: 78 pages
Date: 2025-04-02
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Working Paper: The Fatal Consequences of Brain Drain (2025)
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