Is there a ‘pig cycle’ in the labour supply of doctors? How training and immigration policies respond to physician shortages

Shortage of physicians is a big challenge in many OECD countries. Policy makers try to tackle this issue by increasing the number of students entering medical school and by recruiting internationally. This paper investigates which strategies OECD governments adopt and when these policies are effective in addressing the medical shortages. Due to the length of time medical training requires, the impact of the expansion of medical school capacity should take longer to be effective than the recruitment of foreign-trained physicians. We have built a dataset that comprises information about physician shortages, the number of medical school graduates, and the number of foreign-trained physicians. We find that OECD governments, after a period of medical shortages, produce a higher number of medical graduates in the long run but in the short term face an increasing emigration of their practicing physicians and recruit highly from abroad. IV estimations confirm the effect through the immigration strategy. Simulation results show the limits of only recruiting abroad in the long term but also point out its appropriateness, in the short term, where there is a recurrent cycle of shortage/surplus in the labour supply of physicians.