Physicians' Occupational Licensing and the Quantity-Quality Trade-Off

Occupational licensing is a widespread quality regulation that increases the quality of labor but reduces its quantity. We provide a framework to empirically quantify this trade-off and apply it to physician licensing, where both quality and access to care are critical concerns. Using quasi-exogenous variation driven mostly by a recent and unprecedented migration of physicians to Chile, we show that more physicians improve access and patient outcomes in tertiary care, including mortality. We also find that lower quality—as measured by physician performance on the licensing exam—worsens patient outcomes. Building on these findings, we evaluate the implications of locally changing the stringency of the current licensing policy.