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Do Dutch dentists extract monopoly rents?

Author

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

Abstract

We exploit admission lotteries to estimate the payoffs to the dentistry study 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 human capital investments or sacrifices in family outcomes. The natural explanation is that Dutch dentists extract a monopoly rent, which we attribute to the limited supply of dentists in the Netherlands. We discuss policies to curtail this rent.

Suggested Citation

  • Ketel, Nadine & Leuven, Edwin & Oosterbeek, Hessel & van der Klaauw, Bas, 2018. "Do Dutch dentists extract monopoly rents?," CEPR Discussion Papers 12738, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12738
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    References listed on IDEAS

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    1. 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.
    2. Hartog, Joop & Oosterbeek, Hessel, 1993. "Public and private sector wages in the Netherlands," European Economic Review, Elsevier, vol. 37(1), pages 97-114, January.
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    4. Joseph G. Altonji & Erica Blom & Costas Meghir, 2012. "Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 185-223, July.
    5. Jake Bradley & Fabien Postel-Vinay & Hélène Turon, 2017. "Public Sector Wage Policy and Labor Market Equilibrium: A Structural Model," Journal of the European Economic Association, European Economic Association, vol. 15(6), pages 1214-1257.
    6. 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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    9. Justine S. Hastings & Christopher A. Neilson & Seth D. Zimmerman, 2013. "Are Some Degrees Worth More than Others? Evidence from college admission cutoffs in Chile," NBER Working Papers 19241, National Bureau of Economic Research, Inc.
    10. Shepard, Lawrence, 1978. "Licensing Restrictions and the Cost of Dental Care," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 187-201, April.
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    12. Morris M. Kleiner, 2000. "Occupational Licensing," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 189-202, Fall.
    13. 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.
    14. Kirkebøen, Lars & Leuven, Edwin & Mogstad, Magne, 2014. "Field of Study, Earnings, and Self-Selection," Memorandum 29/2014, Oslo University, Department of Economics.
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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).
    2. Anna-Lena Trescher & Stefan Listl & Onno Galien & Frank Gabel & Olivier Kalmus, 2020. "Once bitten, twice shy? Lessons learned from an experiment to liberalize price regulations for dental care," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(3), pages 425-436, April.

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    More about this item

    Keywords

    dentists; monopoly rents; random assignment; Returns to education;
    All these keywords.

    JEL classification:

    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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