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Do Dutch dentists extract monopoly rents?

Author

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  • Ketel, Nadine
  • Leuven, Edwin
  • Oosterbeek, Hessel
  • van der Klaauw, Bas

Abstract

We exploit lottery-determined admission to dental school to estimate the payoffs to the study of dentistry in the Netherlands. Using data from up to 22 years after the lottery, we find that in most years after graduation dentists earn around 50,000 Euros more than they would earn in their next-best profession. The payoff is larger for men than for women but does not vary with high school GPA. The large payoffs cannot be attributed to longer working hours, larger investments while studying (opportunity costs and direct costs), or unpleasant aspects of working as a dentist. A plausible explanation is that dentists earn a monopoly rent. Results from regressions of dentists’ earnings on dentists density are consistent with this, as are the facts that the supply of dentists in the Netherlands is low and that the payoff does not vary with high school GPA.

Suggested Citation

  • Ketel, Nadine & Leuven, Edwin & Oosterbeek, Hessel & van der Klaauw, Bas, 2019. "Do Dutch dentists extract monopoly rents?," Journal of Health Economics, Elsevier, vol. 63(C), pages 145-158.
  • Handle: RePEc:eee:jhecon:v:63:y:2019:i:c:p:145-158
    DOI: 10.1016/j.jhealeco.2018.11.001
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    References listed on IDEAS

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    1. Morris M. Kleiner, 2000. "Occupational Licensing," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 189-202, Fall.
    2. Lars J. Kirkeboen & Edwin Leuven & Magne Mogstad, 2016. "Editor's Choice Field of Study, Earnings, and Self-Selection," The Quarterly Journal of Economics, Oxford University Press, vol. 131(3), pages 1057-1111.
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    4. Kleiner, Morris M & Kudrle, Robert T, 2000. "Does Regulation Affect Economic Outcomes? The Case of Dentistry," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 547-582, October.
    5. Jostein Grytten & Rune Sørensen, 2000. "Competition and dental services," Health Economics, John Wiley & Sons, Ltd., vol. 9(5), pages 447-461.
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    9. Nadine Ketel & Edwin Leuven & Hessel Oosterbeek & Bas van der Klaauw, 2016. "The Returns to Medical School: Evidence from Admission Lotteries," American Economic Journal: Applied Economics, American Economic Association, vol. 8(2), pages 225-254, April.
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    14. repec:mpr:mprres:5058 is not listed on IDEAS
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    Cited by:

    1. Artmann, Elisabeth & Ketel, Nadine & Oosterbeek, Hessel & van der Klaauw, Bas, 2018. "Field of Study and Family Outcomes," IZA Discussion Papers 11658, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Dentists; Medical labor markets; Occupational licensing; Monopoly rents; Admission lotteries;

    JEL classification:

    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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