Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 32/2012: Do Medical Doctors Respond to Economic Incentives?

Leif Andreassen (), Maria Laura Di Tomasso () and Steinar Strøm ()
Additional contact information
Leif Andreassen: Department of Economics “Cognetti de Martiis”,, Postal: University of Torino , Via Po 53 , 10124 Torino , Italy , and Statistics Norway , Oslo, Norway
Maria Laura Di Tomasso: Department of Economics “Cognetti de Martiis”,, Postal: University of Torino , Via Po 53 , 10124 , Torino , Italy , and Frisch Centre for Economic Research Gaustadalleen 21 , NO-0349 Oslo , Norway
Steinar Strøm: Department of Economics “Cognetti de Martiis”,, Postal: University of Torino , Via Po 53 , 10124 , Torino , Italy , and Frisch Centre for Economic Research Gaustadalleen 21 , NO-0349 Oslo , Norway

Abstract: A longitudinal analysis of married physicians labor supply is carried out on Norwegian data from 1997 to 1999. The model utilized for estimation implies that physicians can choose among 10 different job packages which are a combination of part time/full time, hospital/primary care, private/public sector, and not working. Their current choice is influenced by past available options due to a taste or habit persistence parameter in the utility function. In the estimation we take into account the budget constraint, including all features of the tax system. Our results imply that an overall wage increase or less progressive taxation moves married physicians towards full time job packages, in particular to full time jobs in the private sector. But the overall and aggregate labor supply elasticities in the population of employed doctors are rather low compared to previous estimates.

Keywords: Physicians’ labor supply; multi-sector; panel data

JEL-codes: C35; I10; J22

44 pages, October 10, 2012

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