State Regulation and the Mobility of Nurses: An Examination of the Nurse Licensure Compact

There is concern that state licensure requirements impede efficient mobility of licensed professionals to areas of high demand. Nursing has not been immune to this criticism, especially in light of persistent nurse shortages and large expected future demand. The Nurse Licensure Compact (NLC) was introduced to solve this problem by permitting registered nurses to practice across state lines and making licensure easier to obtain for nurses moving between member states.  We exploit the staggered adoption of the NLC across states and over time to examine whether a reduction in licensure-induced barriers alters the nurse labor market. Specifically, we examine whether NLC adoption is associated with a greater likelihood of cross-state commuting, cross-state mobility, and an expansion in the extent of the nurse labor market. We also look at impacts on nurse salary and wages, though the expected effect on these outcomes is theoretically ambiguous. Our difference-in-differences strategy controls for any time-invariant characteristics of states that may correlate with both labor market outcomes and licensure laws. Our analysis uses detailed data on place of work and residence from the over 200,000 nurses in the 1980 to 2008 waves of the National Survey Sample of Registered Nurses to identify the nurses within each state that are expected to be most impacted by licensure adoption in their own and surrounding states. This study provides some of the first evidence on the likely effects of nationalizing nurse licensure.