October 3rd, 2014
from the Boston Fed
Importing foreign nurses has been used as a strategy to ease nursing shortages in the United States. The effectiveness of this policy critically depends on the long-run response of native-born nurses. It was examined how the immigration of foreign-born registered nurses (RNs) affects the occupational choice and long-run employment decisions of native RNs. Using a variety of empirical strategies that exploit the geographical distribution of immigrant nurses across U.S. cities, evidence was found of large displacement effects - over a 10-year period, for every foreign nurse that migrates to a city, between one and two fewer native nurses are employed in that city.
We find similar results at the state level using data on individuals taking the nursing board exam—an increase in the flow of foreign nurses significantly reduces the number of natives sitting for licensure exams in the states that are more dependent on foreign-born nurses compared to those states that are less dependent on foreign nurses. Using data on self-reported workplace satisfaction among a sample of California nurses, we find evidence suggesting that some of the displacement effects could be driven by a decline in the perceived quality of the workplace environment.