Where Did the Physicians Go? A Study of the Response to Regional Earnings Differences

This paper examines the geographical movements of physicians in Finland 1987–2001 and what affected their choice of the region of the workplace. For this purpose earnings equations for the different regions are also estimated. In addition to gender and family variables, the variables for physicians qualifications explain a significant part of the income differences. The effect of the expected earningson the choice of region is ambiguous. It is argued that a likely reason for the lack of a clear effect of the expected income on the choice of the region of the workplace is that there are omitted variables, which are correlated with the earnings of the physicians and which strongly affect the attractiveness of thejob. To achieve an appropriate distribution of physician services across the regions giving attentionto a broader set of factors influencing the possibilities for education and the working conditions of the physicians is likely to be more useful.