Labour supply, service intensity, and contracts: Theory and evidence on physicians

Bernard Fortin (), Nicolas Jacquemet () and Bruce Shearer
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Bernard Fortin: Département d'Economique, Université Laval - ULaval - Université Laval [Québec], CRREP - Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques - ULaval - Université Laval [Québec], CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal
Bruce Shearer: Département d'Economique, Université Laval - ULaval - Université Laval [Québec], CRREP - Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques - ULaval - Université Laval [Québec], CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal

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Abstract: Based on linked administrative and survey panel data, we analyze the labour supply behaviour of physicians who could adopt either a standard fee-for-service contract or a mixed remuneration (MR) contract. Under MR, physicians received a per diem and a reduced fee for services provided. We present estimates of a structural discrete choice model that incorporates service intensity (services provided per hour) and contract choice into a labour supply framework. We use our estimates to predict (ex ante) the effects of contracts on physician behaviour and welfare, as measured by average equivalent variations. The supply of services is reduced under a MR contract, suggesting incentives matter. Hours spent seeing patients is less sensitive to incentives than the supply of services. Our results suggest that a reform forcing all physicians to adopt the MR system would have substantially larger effects on physician behaviour than were measured under the observed reform. A pure salary (per diem) reform would sharply reduce services but would increase time spent seeing patients.

Keywords: Practice Patterns of Physicians; Labour Supply; Service Intensity; Fee-for-Service Contract; Mixed Remuneration Contract; Discrete Choice Models (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-dcm and nep-hea
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Published in Journal of Applied Econometrics, 2021, 36 (6), pp.686-702. ⟨10.1002/jae.2840⟩

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Journal Article: Labour supply, service intensity, and contracts: Theory and evidence on physicians (2021)
Working Paper: Labour supply, service intensity, and contracts: Theory and evidence on physicians (2021)
Working Paper: Labour supply, service intensity, and contracts: Theory and evidence on physicians (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03426996

DOI: 10.1002/jae.2840

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