Working Paper: NBER ID: w31469
Authors: Joshua D. Gottlieb; Maria Polyakova; Kevin Rinz; Hugh Shiplett; Victoria Udalova
Abstract: Is government guiding the invisible hand at the top of the labor market? We use new administrative data to measure physicians' earnings and estimate the influence of healthcare policies on these earnings, physicians' labor supply, and allocation of talent. Combining the administrative registry of U.S.~physicians with tax data, Medicare billing records, and survey responses, we find that physicians' annual earnings average $350,000 and comprise 8.6% of national healthcare spending. The age-earnings profile is steep; business income comprises one-quarter of earnings and is systematically underreported in survey data. There are major differences in earnings across specialties, regions, and firm sizes, with an unusual geographic pattern compared with other workers. We show that health policy has a major impact on the margin: 25% of physician fee revenue driven by Medicare reimbursements accrues to physicians personally. Physicians earn 6% of public money spent on insurance expansions. We find that these policies in turn affect the type and quantity of medical care physicians supply in the short run; retirement timing in the medium run; and earnings affect specialty choice in the long run.
Keywords: human capital; physician earnings; labor supply; healthcare policy
JEL Codes: I13; I18; J24; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increase in primary care earnings (I11) | Probability of graduates entering primary care (I11) |
| Government policies subsidizing surgery (H51) | Attraction of top talent to surgical specialties (J44) |
| Government policies subsidizing primary care (H51) | Improvement of primary care services (I11) |
| Government reimbursement policies (I18) | Physicians' earnings (I11) |
| Government reimbursement policies (I18) | Physicians' labor supply (J44) |
| Medicare reimbursements (I18) | Physicians' earnings (I11) |
| Medicare reimbursements (I18) | Physicians' labor supply (J44) |