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Inductive Effect of Physicians Number and Hospital Bed on Health Expenditures in Iran


  • Panahi, Hossein

    () (Associate Professor of Economics, University of Tabriz)

  • Salmani, Behzad

    () (Associate Professor of Economics, University of Tabriz)

  • Nasibparast, Sima

    () (Ph.D. Student in Economics, University of Tabriz)


According to Roemer's Law, due to induced demand in healthcare services, increasing the number of hospital beds, and even doctors, will make healthcare expenditures increased. Applying econometric analysis of panel data of Iran provinces over the period of 2001-2010, this study tries to investigate the existence of physician-induced demand in Iran. The results indicate that a change in the number of physicians has a significant positive impact on the provinces health expenditure. Therefore the existence of induced demand in Iran is confirmed. However, the results of examining the density of hospital beds show that there is no supplier-induced demand, and an inverse relationship is observed between the variable and health expenditure. The results also show that the variables of GDP and mortality rate have significantly positive relationship with health expenditure, while the variables of education, unemployment and fertility rate are significantly and inversely correlated with provinces health expenditure. Among the variables, fertility rate does not have the predicted sign and the proportion of population over 65 years and degree of urbanization also had no significant effect on health expenditure.

Suggested Citation

  • Panahi, Hossein & Salmani, Behzad & Nasibparast, Sima, 2015. "Inductive Effect of Physicians Number and Hospital Bed on Health Expenditures in Iran," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 2(2), pages 25-42, September.
  • Handle: RePEc:ris:qjatoe:0010

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    More about this item


    Health Expenditure; Induced Demand; Roemer Theory; Feldstein Theory; Iranian Provinces; Panel Data.;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets


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