On the Sorting of Physicians across Medical Occupations

Pascal Courty and Gerald Marschke

No 3862, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We model the sorting of medical students across medical occupations and identify a mechanism that explains the possibility of differential productivity across occupations. The model combines moral hazard and matching of physicians and occupations with pre-matching investments. In equilibrium assortative matching takes place; more able physicians join occupations less exposed to moral hazard risk, face more powerful performance incentives, and are more productive. Under-consumption of health services relative to the first best allocation increases with occupational (moral hazard) risk. Occupations with risk above a given threshold are not viable. The model offers an explanation for the persistence of distortions in the mix of health care services offered, the differential impact of malpractice risk across occupations, and the recent growth in medical specialization.

Keywords: performance measurement; moral hazard; incentives; matching; pre-matching investment; career choice; medical specialization (search for similar items in EconPapers)
JEL-codes: D82 I10 J31 J33 L23 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2008-12
New Economics Papers: this item is included in nep-cta, nep-hea and nep-lab
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Working Paper: On the Sorting of Physicians across Medical Occupations (2008)
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