Immigration and Occupational Choice of Natives: the Case of Nurses in the United States

We analyze the effects of foreign nurse immigration on the occupational choice of natives and the quality of native entrants into the nursing sector. Using an empirical strategy that exploits large geographical differences in the distribution of foreign nurses across US states, we find that, in response to foreign nurse immigration, fewer native nurses sit for the nursing licensure examinations in states that are historically more dependent on foreign nurses. Moreover, we find that states with larger increases in foreign nurses have fewer young natives choosing to enter nursing, with the decline offset by an increase in the supply of young natives to primary school teaching. Using data on the passing rates of native nurses in a state as a proxy for nursing quality, we find robust evidence that an increase in the flow of foreign nurses increases the passing rate of natives in more dependent states relative to less dependent states. We suggest that the increase in quality may be induced by native nurses' response to an increase in competition or potentially consistent with the predictions of a Roy (1951) model of occupational selection where native nurses are positively selected into the nursing sector. (JEL codes: J61, J24, J44).