Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 721: Do Dutch dentists extract monopoly rents?

Nadine Ketel (), Edwin Leuven , Hessel Oosterbeek and Bas van der Klaauw
Additional contact information
Nadine Ketel: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 GÖTEBORG, Sweden
Edwin Leuven: Department of Economics, University of Oslo
Hessel Oosterbeek: University of Amsterdam, School of Economics
Bas van der Klaauw: Department of Economics, VU University, Amsterdam

Abstract: We exploit admission lotteries to estimate the payoffs to the dentistry study in the Netherlands. Using data from up to 22 years after the lottery, we find that in most years after graduation dentists earn around 50,000 Euros more than they would earn in their next-best profession. The payoff is larger for men than for women but does not vary with high school GPA. The large payoffs cannot be attributed to longer working hours, larger human capital investments or sacrifices in family outcomes. The natural explanation is that Dutch dentists extract a monopoly rent, which we attribute to the limited supply of dentists in the Netherlands. We discuss policies to curtail this rent.

Keywords: Dentists; returns to education; monopoly rents; random assignment

JEL-codes: C36; I18; I23; J44

35 pages, February 2018

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