Abstract
Do internal trade agreements meaningfully integrate labour markets? I provide evidence that effectively removing regulatory barriers in labour markets produces measurable reallocation, with effects concentrated in specialties where credentialing friction was highest. I use Saskatchewan’s 2010 accession to the New West Partnership Trade Agreement (NWPTA) as a natural experiment, and estimate a gravity-based difference-in-differences model on a bilateral physician stock panel covering all Canadian provinces and 29 medical specialties from 2000 to 2020. I find that following Saskatchewan’s accession to the NWPTA, bilateral physician stocks along treated corridors were 7.7% above their pre-treatment trajectory, while domestic retention was 9.1% below its pre-treatment trajectory, with no statistically significant wage response. The absence of a statistically significant wage response is consistent with regulatory barriers, rather than price signals, having been the binding constraint on physician mobility. The effects are concentrated in specialties with high pre-existing credentialing frictions and absent where credentials were already portable, providing a within-sample placebo. The implied wage-equivalent cost of regulatory barriers is $13,573 per physician per year. My findings are consistent with the hypothesis that internal trade agreements integrate labour markets only when their design meaningfully and effectively removes regulatory barriers.
