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The production of health and the valuation of medical inputs in wage-amenity models

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  • Schumacher, Edward J.
  • Whitehead, John C.

Abstract

Using a hedonic wage-amenity model, this paper examines the valuation of medical inputs into the production of health. The data used in this study include the incomes, demographics and measures of human capital for households in eastern North Carolina with county level medical input supply. These data allow an estimate of the marginal value of medical care inputs such as the physician to population ratio and the availability of specialized services in an area of the country where the lack of available medical care has been of particular concern to policy makers. Our results indicate that while health care inputs are not a significant determinant of earnings overall, they are important in counties that have been designated as medically underserved. In underserved counties each additional physician per 10,000 individuals in the county decreases earnings by about 11.6%. This suggests that physicians act as an amenity and workers are willing to accept lower wages to locate in counties with a higher physician to population ratio.

Suggested Citation

  • Schumacher, Edward J. & Whitehead, John C., 2000. "The production of health and the valuation of medical inputs in wage-amenity models," Social Science & Medicine, Elsevier, vol. 50(4), pages 507-515, February.
  • Handle: RePEc:eee:socmed:v:50:y:2000:i:4:p:507-515
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    References listed on IDEAS

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    1. Gyourko, Joseph & Tracy, Joseph, 1991. "The Structure of Local Public Finance and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 774-806, August.
    2. Gyourko, Joseph & Tracy, Joseph, 1989. "The Importance of Local Fiscal Conditions in Analyzing Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1208-1231, October.
    3. Clark, David E. & Kahn, James R., 1989. "The two-stage hedonic wage approach: A methodology for the valuation of environmental amenities," Journal of Environmental Economics and Management, Elsevier, vol. 16(2), pages 106-120, March.
    4. Blomquist, Glenn C & Berger, Mark C & Hoehn, John P, 1988. "New Estimates of Quality of Life in Urban Areas," American Economic Review, American Economic Association, vol. 78(1), pages 89-107, March.
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