The Fatal Consequences of Brain Drain

Samuel Dodini, Petter Lundborg (), Katrine Vellesen Loken () and Alexander Willén ()
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Petter Lundborg: Lund University
Katrine Vellesen Loken: Norwegian School of Economics
Alexander Willén: Norwegian School of Economics

No 17819, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: brain drain; worker mobility; mortality (search for similar items in EconPapers)
JEL-codes: H1 J2 J6 (search for similar items in EconPapers)
Date: 2025-04
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Working Paper: The Fatal Consequences of Brain Drain (2025)
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