IDEAS home Printed from https://ideas.repec.org/a/eee/jhecon/v105y2026ics0167629625001377.html

Workforce impacts of subsidised mental healthcare: Evidence on supply, geographic distribution, and earnings

Author

Listed:
  • Black, Nicole
  • Harris, Anthony
  • Johnston, David W.
  • Trinh, Trong-Anh

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, location, and earnings of psychologists. Using an event-study design with administrative tax records and census data, we find that the program: (1) increased the supply of psychologists, with minimal effect on average hours worked per psychologist; (2) increased the likelihood of psychologists working in non-metropolitan areas, supporting broader access to mental healthcare; and (3) raised psychologists’ annual personal incomes.

Suggested Citation

  • Black, Nicole & Harris, Anthony & Johnston, David W. & Trinh, Trong-Anh, 2026. "Workforce impacts of subsidised mental healthcare: Evidence on supply, geographic distribution, and earnings," Journal of Health Economics, Elsevier, vol. 105(C).
    • Handle: RePEc:eee:jhecon:v:105:y:2026:i:c:s0167629625001377
    DOI: 10.1016/j.jhealeco.2025.103102
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167629625001377
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jhealeco.2025.103102?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Stephanie Khoury & Jonathan M. Leganza & Alex Masucci, 2025. "Health Professional Shortage Areas and Physician Location Decisions," American Journal of Health Economics, University of Chicago Press, vol. 11(3), pages 487-527.
    2. Francisco Costa & Letícia Nunes & Fabio Miessi Sanches, 2024. "How to Attract Physicians to Underserved Areas? Policy Recommendations from a Structural Model," The Review of Economics and Statistics, MIT Press, vol. 106(1), pages 36-52, January.
    3. Thomas Abhayaratna & Andrew Carter & Shane Johnson, 2022. "The ATO Longitudinal Information Files (ALife): Individuals—A New Dataset for Public Policy Research," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(4), pages 541-557, December.
    4. Douven, Rudy & Remmerswaal, Minke & Mosca, Ilaria, 2015. "Unintended effects of reimbursement schedules in mental health care," Journal of Health Economics, Elsevier, vol. 42(C), pages 139-150.
    5. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2008. "Bootstrap-Based Improvements for Inference with Clustered Errors," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 414-427, August.
    6. Alice Chen & Anthony T. Lo Sasso & Michael R. Richards, 2018. "Supply‐side effects from public insurance expansions: Evidence from physician labor markets," Health Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 690-708, April.
    7. Ashesh Rambachan & Jonathan Roth, 2023. "A More Credible Approach to Parallel Trends," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(5), pages 2555-2591.
    8. Courtemanche, Charles & Friedson, Andrew & Koller, Andrew P. & Rees, Daniel I., 2019. "The affordable care act and ambulance response times," Journal of Health Economics, Elsevier, vol. 67(C).
    9. Jeffrey Clemens & Joshua D. Gottlieb, 2014. "Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health?," American Economic Review, American Economic Association, vol. 104(4), pages 1320-1349, April.
    10. Craig L. Garthwaite, 2012. "The Doctor Might See You Now: The Supply Side Effects of Public Health Insurance Expansions," American Economic Journal: Economic Policy, American Economic Association, vol. 4(3), pages 190-215, August.
    11. Huh, Jason, 2021. "Medicaid and provider supply," Journal of Public Economics, Elsevier, vol. 200(C).
    12. Diane Alexander & Molly Schnell, 2024. "The Impacts of Physician Payments on Patient Access, Use, and Health," American Economic Journal: Applied Economics, American Economic Association, vol. 16(3), pages 142-177, July.
    13. Liran Einav & Amy Finkelstein & Neale Mahoney, 2018. "Provider Incentives and Healthcare Costs: Evidence From Long‐Term Care Hospitals," Econometrica, Econometric Society, vol. 86(6), pages 2161-2219, November.
    14. Jevay Grooms & Alberto Ortega, 2019. "Examining Medicaid Expansion and the Treatment of Substance Use Disorders," AEA Papers and Proceedings, American Economic Association, vol. 109, pages 187-192, May.
    15. Johanna Catherine Maclean & Ioana Popovici & Elisheva R. Stern, 2018. "Health Insurance Expansions and Providers' Behavior: Evidence from Substance-Use- Disorder Treatment Providers," Journal of Law and Economics, University of Chicago Press, vol. 61(2), pages 279-310.
    16. David Roodman & James G. MacKinnon & Morten Ørregaard Nielsen & Matthew D. Webb, 2019. "Fast and wild: Bootstrap inference in Stata using boottest," Stata Journal, StataCorp LLC, vol. 19(1), pages 4-60, March.
    17. Neprash, Hannah T. & Zink, Anna & Sheridan, Bethany & Hempstead, Katherine, 2021. "The effect of Medicaid expansion on Medicaid participation, payer mix, and labor supply in primary care," Journal of Health Economics, Elsevier, vol. 80(C).
    18. Frakes, Michael D. & Frank, Matthew B. & Seabury, Seth A., 2020. "The effect of malpractice law on physician supply: Evidence from negligence-standard reforms," Journal of Health Economics, Elsevier, vol. 70(C).
    19. McNamara, Cici & Pineda-Torres, Mayra, 2024. "Medical Residency Subsidies and Physician Shortages," IZA Discussion Papers 17263, IZA Network @ LISER.
    20. James G. MacKinnon & Matthew D. Webb, 2017. "Wild Bootstrap Inference for Wildly Different Cluster Sizes," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(2), pages 233-254, March.
    21. Marcus Dillender, 2022. "How Do Medicaid Expansions Affect the Demand for Healthcare Workers? Evidence from Vacancy Postings," Journal of Human Resources, University of Wisconsin Press, vol. 57(4), pages 1350-1393.
    22. Thomas Buchmueller & Sarah Miller & Marko Vujicic, 2016. "How Do Providers Respond to Changes in Public Health Insurance Coverage? Evidence from Adult Medicaid Dental Benefits," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 70-102, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nicole Black & Anthony Harris & David W. Johnston & Trong-Anh Trinh, 2024. "Workforce Impacts of Subsidised Mental Healthcare: Evidence on Supply, Earnings, and Geographic Distribution," Papers 2024-17, Centre for Health Economics, Monash University.
    2. Dillender, Marcus & Jinks, Lu & Lo Sasso, Anthony T., 2023. "When (and why) providers do not respond to changes in reimbursement rates," Journal of Public Economics, Elsevier, vol. 217(C).
    3. Jason Huh & Jianjing Lin, 2025. "More doctors in town now? Evidence from Medicaid expansions," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 44(3), pages 869-892, June.
    4. Hamersma, Sarah & Maclean, Johanna Catherine, 2021. "Do expansions in adolescent access to public insurance affect the decisions of substance use disorder treatment providers?," Journal of Health Economics, Elsevier, vol. 76(C).
    5. Michael DiNardi, 2021. "Affordable Care Act Medicaid expansions and the nurse labor market," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 367-398, July.
    6. Jeffrey Clemens & Joshua D. Gottlieb & Jeffrey Hicks, 2021. "How Would Medicare for All Affect Health System Capacity? Evidence from Medicare for Some," Tax Policy and the Economy, University of Chicago Press, vol. 35(1), pages 225-262.
    7. Sukriti Beniwal & Lauren Hoehn‐Velasco & Diana R. Jolles, 2026. "Public health insurance expansions and non‐physician providers: Evidence from Certified Nurse Midwives," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 45(2), March.
    8. Cuiping Schiman, 2025. "ACA health insurance expansions, health professional shortage areas, and the geographic distribution of healthcare providers," Empirical Economics, Springer, vol. 69(3), pages 1551-1583, September.
    9. James G. MacKinnon & Morten Ørregaard Nielsen & Matthew D. Webb, 2023. "Fast and reliable jackknife and bootstrap methods for cluster‐robust inference," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(5), pages 671-694, August.
    10. Cadena, Brian C. & Smith, Austin C., 2022. "Performance pay, productivity, and strategic opt-out: Evidence from a community health center," Journal of Public Economics, Elsevier, vol. 206(C).
    11. MacKinnon, James G., 2023. "Fast cluster bootstrap methods for linear regression models," Econometrics and Statistics, Elsevier, vol. 26(C), pages 52-71.
    12. Brian Fabo & Martina Jancokova & Elisabeth Kempf & Lubos Pastor, 2020. "Fifty Shades of QE: Conflicts of Interest in Economic Research," Working Papers 2020-128, Becker Friedman Institute for Research In Economics.
    13. Wang, Wenjie, 2021. "Wild Bootstrap for Instrumental Variables Regression with Weak Instruments and Few Clusters," MPRA Paper 106227, University Library of Munich, Germany.
    14. Lei, Xiaoyan & Mak, Henry Y. & Shi, Julie & Ta, Yuqi, 2025. "A comprehensive assessment of provider payment reform: Insights from China," Journal of Economic Behavior & Organization, Elsevier, vol. 237(C).
    15. Jeffrey Clemens & Jonathan M. Leganza & Alex Masucci, 2026. "Plugging gaps in payment systems: Evidence from the take‐up of new Medicare billing codes," Contemporary Economic Policy, Western Economic Association International, vol. 44(1), pages 105-130, January.
    16. Dorner, Matthias & Görlitz, Katja, 2020. "Training, Wages and a Missing School Graduation Cohort," IZA Discussion Papers 13490, IZA Network @ LISER.
    17. Kamyar Nasseh & John R. Bowblis, 2022. "The effect on dental care utilization from transitioning pediatric Medicaid beneficiaries to managed care," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 1103-1128, June.
    18. MacKinnon, James G. & Nielsen, Morten Ørregaard & Webb, Matthew D., 2023. "Testing for the appropriate level of clustering in linear regression models," Journal of Econometrics, Elsevier, vol. 235(2), pages 2027-2056.
    19. Doko Tchatoka, Firmin & Wang, Wenjie, 2021. "Size-corrected Bootstrap Test after Pretesting for Exogeneity with Heteroskedastic or Clustered Data," MPRA Paper 110899, University Library of Munich, Germany.
    20. Wang, Wenjie & Zhang, Yichong, 2024. "Wild bootstrap inference for instrumental variables regressions with weak and few clusters," Journal of Econometrics, Elsevier, vol. 241(1).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jhecon:v:105:y:2026:i:c:s0167629625001377. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505560 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.