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On the Sorting of Physicians across Medical Occupations

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  • Courty, Pascal

    () (European University Institute)

  • Marschke, Gerald

    () (University at Albany, SUNY)

Abstract

We model the sorting of medical students across medical occupations and identify a mechanism that explains the possibility of differential productivity across occupations. The model combines moral hazard and matching of physicians and occupations with pre-matching investments. In equilibrium assortative matching takes place; more able physicians join occupations less exposed to moral hazard risk, face more powerful performance incentives, and are more productive. Under-consumption of health services relative to the first best allocation increases with occupational (moral hazard) risk. Occupations with risk above a given threshold are not viable. The model offers an explanation for the persistence of distortions in the mix of health care services offered, the differential impact of malpractice risk across occupations, and the recent growth in medical specialization.

Suggested Citation

  • Courty, Pascal & Marschke, Gerald, 2008. "On the Sorting of Physicians across Medical Occupations," IZA Discussion Papers 3862, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3862
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    More about this item

    Keywords

    performance measurement; moral hazard; incentives; matching; pre-matching investment; career choice; medical specialization;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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