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Medical employment growth, unemployment, and the opportunity cost of health care

Author

Listed:
  • Mark Pauly

    (The Wharton School, University of Pennsylvania)

  • Vivek Nimgaonkar

    (The Wharton School, University of Pennsylvania)

Abstract

This policy note examines the relationship between the growth in the share of the workforce in medical care and the shares of workers who are unemployed, working in services or government employment, or working elsewhere in the economy. These changes provide measures of the opportunity cost of higher medical care spending, the majority of which is on labor. Using state data over the period 1990–2010, we find that, in years of high economy-wide unemployment, growth in medical employment in a state reduces the unemployment rate significantly; it does not appear to displace employment in other services or government employment. In periods of low economy wide-unemployment, the growth in the medical employment share does not reduce unemployment. We argue that the opportunity cost of higher medical care employment may sometimes not be so high in terms of real labor resources, nor in terms of employment for needed government services.

Suggested Citation

  • Mark Pauly & Vivek Nimgaonkar, 2016. "Medical employment growth, unemployment, and the opportunity cost of health care," International Journal of Health Economics and Management, Springer, vol. 16(4), pages 387-396, December.
    • Handle: RePEc:kap:ijhcfe:v:16:y:2016:i:4:d:10.1007_s10754-016-9197-1
    DOI: 10.1007/s10754-016-9197-1
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    References listed on IDEAS

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    1. Getzen, Thomas E., 2000. "Health care is an individual necessity and a national luxury: applying multilevel decision models to the analysis of health care expenditures," Journal of Health Economics, Elsevier, vol. 19(2), pages 259-270, March.
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    More about this item

    Keywords

    Health care; Costs of health care; Analysis of labor markets; Medical economics; Medical employment;
    All these keywords.

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health

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