Adam Smith Business School

Professor Alexander Willén, Norwegian School of Economics

"The Fatal Consequences of Brain Drain"
Wednesday, 05 March 2025. 15:00-16:30
Room 141A, Adam Smith Business School Building

Abstract

This paper examines the welfare effects of losing high-skilled workers by analyzing a labor demand shock in Norway that raised real wages and pulled Swedish doctors across the border for temporary commuting stays. Using linked individual-level data from both countries, we leverage a dose-response difference-in-differences approach, exploiting pre-shock variation in physician wages across localities in Sweden to predict physician commuting. We find a substantial outflow of Swedish physicians, doubling the number of Swedish doctors commuting to Norway. These were primarily young, highly productive generalists. This loss had direct negative health consequences in Sweden, raising mortality rates among individuals aged 55+. The increase in deaths was driven by acute conditions such as circulatory, respiratory, and infectious diseases, which often require immediate medical intervention. The mortality effects stem from a strained healthcare system, where physician shortages led to increased hospitalizations, premature discharges, and higher readmission rates, delaying critical care. In contrast, the influx of commuting doctors into Norway did not yield measurable health improvements.

Bio

Professor of Economics at the Norwegian School of Economics.

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First published: 18 February 2025