Scandinavian Working Papers in Economics

HERO Online Working Paper Series,
University of Oslo, Health Economics Research Programme

No 2003:19: A Discrete Choice Analysis of Norwegian Physicians’ Labor Supply and Sector Choice

Erik Magnus Sæther ()
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Erik Magnus Sæther: Ragnar Frisch Centre for Economic Research, Postal: Gaustadalléen 21, N-0349 Oslo, Norway

Abstract: What is the effect of increased wages on physician’s working hours and sector choice? This study applies an econometric framework that allows for non-convex budget sets, nonlinear labor supply curves and imperfect markets with institutional constraints. The physicians are assumed to make choices from a finite set of job possibilities, characterized by practice form, hours and wage rates. The individuals may combine their main position with an extra job, opening for a variety of combinations of hours in the respective jobs. I take into account the complicated payment schemes for physicians, taxes and household characteristics when estimating labor supply on Norwegian micro data. The results show a modest response in total hours to a wage increase, but a reallocation of hours in favor of the sector with increased wages.

Keywords: Physicians; discrete choice; labor supply

JEL-codes: C25; I10; J22

47 pages, June 22, 2009

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