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Intergenerational inequalities in GPs’ earnings: experience, time and cohort effects

  • Brigitte Dormont
  • Anne-Laure Samson

This paper analyses the regulation of ambulatory care and its impact on physicians' careers, using a representative panel of 6,016 French self-employed GPs over the years 1983 to 2004. The beginning of their activity is influenced by the regulated number of places in medical schools, named in France numerus clausus. We show that the policies aimed at manipulating the numerus clausus strongly affect physicians' permanent level of earnings. Our empirical approach allows us to identify experience, time and cohort effects in GPs' earnings. The estimated cohort effect is very large, revealing that intergenerational inequalities due to fluctuations in the numerus clausus are not negligible. GPs beginning during the eighties have the lowest permanent earnings: they faced the consequences of an unlimited number of places in medical schools in the context of a high density due to the baby-boom numerous cohorts. Conversely, the decrease in the numerus clausus led to an increase in permanent earnings of GPs who began their practice in the mid nineties. Overall, the estimated gap in earnings between "good" and "bad" cohorts may reach 25%. We performed a more thorough analysis of the earnings distribution to examine whether individual unobserved heterogeneity could compensate for average differences between cohorts. Our results about stochastic dominance between earnings distributions by cohort show that it is not the case.

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File URL: http://economix.fr/pdf/dt/2007/WP_EcoX_2007-34.pdf
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Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2007-34.

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Length: 27 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:drm:wpaper:2007-34
Contact details of provider: Postal: 200 Avenue de la République, Bât. G - 92001 Nanterre Cedex
Web page: http://economix.fr
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  1. McGuire, Thomas G., 2000. "Physician agency," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 9, pages 461-536 Elsevier.
  2. Welch, Finis, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S65-97, October.
  3. Eric Delattre & Brigitte Dormont, 2003. "Fixed fees and physician-induced demand: A panel data study on French physicians," Health Economics, John Wiley & Sons, Ltd., vol. 12(9), pages 741-754.
  4. François Bourguignon & Francisco H.G. Ferreira & Phillipe G. Leite, 2002. "Beyond Oaxaca-Blinder: accounting for differences in household income distributions across countries," Textos para discussão 452, Department of Economics PUC-Rio (Brazil).
  5. Dormont, Brigitte & Milcent, Carine, 2005. "Innovation diffusion under budget constraints : Microeconometric evidence on heart attack in France," Economics Papers from University Paris Dauphine 123456789/5430, Paris Dauphine University.
  6. Finis Welch, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," UCLA Economics Working Papers 146, UCLA Department of Economics.
  7. Alain Trannoy & Nicolas Pistolesi & Arnaud Lefranc & Louis-André Vallet, 2004. "Le revenu selon l'origine sociale ; suivi d'un commentaire de Louis-André Vallet," Économie et Statistique, Programme National Persée, vol. 371(1), pages 49-88.
  8. Nijman, T.E. & Verbeek, M.J.C.M., 1992. "Testing for selectivity in panel data models," Other publications TiSEM 7ec34a6c-1d84-4052-971c-d, Tilburg University, School of Economics and Management.
  9. Verbeek, M. & Nijman, T., 1990. "Testing For Selectivity Bias In Panel Data Models," Papers 9018, Tilburg - Center for Economic Research.
  10. Davidson, R. & Duclos, J.-Y., 1998. "Statistical Inference for Stochastic Dominance and for the Measurement of Poverty and Inequality," G.R.E.Q.A.M. 98a14, Universite Aix-Marseille III.
  11. Milton Friedman & Simon Kuznets, 1954. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1.
  12. Malik Koubi, 2003. "Les trajectoires professionnelles : une analyse par cohorte," Économie et Statistique, Programme National Persée, vol. 369(1), pages 119-147.
  13. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
  14. Rizzo, John A. & Zeckhauser, Richard J., 2007. "Pushing incomes to reference points: Why do male doctors earn more?," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 514-536, July.
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