Occupational Licensing and the Healthcare Labor Market

Abstract

We examine the labor market impact of states easing occupational license requirements by expanding the scope of practice (SOP) for nurse practitioners (NPs), allowing them to practice without physician oversight. Using data on job postings, we find that employers increase their demand for NPs when states expand NP SOP. We then show that SOP laws also increase NP earnings and reallocate NPs across the healthcare sector, including increasing self-employment. The laws only mildly increase employment, however. Therefore, expanding NP SOP has the potential to increase access to primary care, but inelastic NP labor supply has largely prevented this from occurring.