Workforce Impacts of Subsidised Mental Healthcare: Evidence on Supply, Earnings, and Geographic Distribution

Nicole Black (), Anthony Harris (), David Johnston and Trong-Anh Trinh ()
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Nicole Black: Centre for Health Economics, Monash Business School, Monash University
Anthony Harris: Centre for Health Economics, Monash Business School, Monash University
Trong-Anh Trinh: Centre for Health Economics, Monash Business School, Monash University

No 2024-17, Working Papers from Centre for Health Economics, Monash University

Abstract: To improve access to affordable mental healthcare, Australia introduced a national, publicly-funded program in 2006 to subsidise psychological services, which were previously privately funded. Theory suggests that by increasing demand, subsidies should incentivise providers to expand supply, either by entering the workforce or by increasing hours. However, expansion depends on supply constraints, particularly in non-metropolitan areas with pronounced workforce shortages. This study examines the program’s effects on the size, work hours, demographic composition, earnings, and location of practising psychologists. Using a difference-in-differences approach with census data and Australian Tax Office records, we find that the program: (1) increased the supply of practising psychologists by 47% within five years, with minimal effect on average hours worked per psychologist; (2) raised psychologists’ annual personal incomes by 17%; and (3) increased the likelihood of psychologists working in non-metropolitan areas by 8%, supporting broader access to mental healthcare.

Keywords: Psychologist; Mental Healthcare; Better Access Initiative; Health Workforce (search for similar items in EconPapers)
JEL-codes: I10 I18 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-hea
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