Occupational Licensing and the Healthcare Labor Market

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 these laws increase NP earnings and reallocate NPs across the healthcare sector, increasing self-employment and changing industrial employment. However, we see no evidence that these laws have increased overall NP employment. Our results suggest that expanding NP SOP has the potential to increase the number of primary care providers, but inelastic labor supply for NPs is largely preventing this from occurring