Immigration, Workforce Composition, and Organizational Performance: The Effect of Brexit on NHS Hospital Quality

Restrictive immigration policies may force firms to abruptly change their workforce composition. But how does this impact the performance of these organizations? We study the effects of the 2016 Brexit referendum, which led to a drop in the share of EU nationality nurses in English hospitals. Using high-quality administrative patient-level data and a continuous difference-in-differences design which exploits the different pre-referendum hospital exposure to the shock, we estimate the causal effect of the workforce composition changes on hospital quality of care. We find that, in the post-referendum period, emergency patients admitted to NHS hospitals with a mean pre-referendum share of EU nurses faced an increase in mortality risk, equivalent to about 1,485 additional deaths per year. These findings are consistent with a theory model that predicts a decrease in the quality of newly hired hospital workers to avert labour shortages. We provide empirical evidence in support of this mechanism by showing that the foreign joiner nurses hired in the post-referendum period were assigned to lower salary grades than those hired prior to the referendum, indicating lower levels of skills and job experience.