Abstract
This paper makes use of the fact that the stock of medical manpower in Canada is institutionally and exogenously determined in order to develop a model predicting physician average net income. An econometric evaluation of this model on a sample involving Canada's ten provinces during 1968–1982 suggests that a one per cent increase in physician fees increases physician average net income by 0.70 per cent, and a one per cent increase in the physician to population ratio reduces average net income by 0.62 per cent. In both cases, the elasticities are less than unity because the supply function for an individual physician is backward bending — on average, a Canadian physician reduces his hours worked by an amount between 0.17 and 0.50 per cent (95 per cent confidence interval) if his real wage rate is increased by one per cent.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Acton JP (1975) Non-monetary factors in the demand for medical services — Some empirical evidence. Journal of Political Economy 83:595–614
Brown MC (1974) Medicare and the medical monopoly. The Canadian Forum April 5–9
Brown MC (1975) Some effects of physician licensing requirements on medical manpower flows in Canada. Industrial Relations 30:436–451
Brown MC (1981) The public finance of medical and dental care in Newfoundland — Some historical and economic considerations. Journal of Social Policy 10:209–227
Brown MC (1987) Caring for profit: Economic dimensions of Canada's health industry. The Fraser Institute, Vancouver
Brown MC (1988) Are health care costs too high because there are too many doctors? In: Wastanake M (ed) Physician manpower in Canada. University of Calgary Press, Calgary
Dodge DA (1972) Occupational wage differentials, occupational licensing, and returns to investment in education: an exploratory analysis. In: Ostrey S (ed) Canadian higher education in the seventies. Information Canada, Ottawa
Evans RG (1974) Supplier-induced demand: some empirical evidence and implications. In: Perlman M (ed) The economics of health and medical care. Macmillan Press for International Economic Association, London
Health and Welfare Canada (1972 through 1985 issues) Canada health manpower inventory. Ottawa
Health and Welfare Canada (1973a) Year to year mobility of physicians resident in Canada by activity status and province of residence, 1969–1972. Ottawa
Health and Welfare Canada (1973b) Earnings of physicians in Canada, 1962–1972. Ottawa
Health and Welfare Canada (1985a) Interprovincial migration of physicians during 1984 and a summary of migration from 1977 to 1984. Report 8, Ottawa
Health and Welfare Canada (1985b) Earnings of physicians in Canada. Ottawa, Working Document
Health and Welfare Canada (1986a) Active civilian physicians who moved abroad, 1977–1985. Ottawa
Health and Welfare Canada (1986b) Payment schedule increases — Canada by province and territory, 1971–1986. Ottawa
Health and Welfare Canada (1960–1975 and 1970–1982 issues) National health expenditures in Canada. Ottawa
Fuchs VR (1978) The supply of surgeons and the demand for operations. Journal of Human Resources 13:35–46
Hay J, Leahy M (1982) Physician-induced demand – An empirical analysis of the consumer information gap. Journal of Health Economics 1:231–244
Leacy FH (ed) (1983) Historical statistics of Canada, second edition. Statistics Canada and the Social Science Federation of Canada
Newhouse JP (1977) Medical care expenditures: A cross-national survey. Journal of Human Resources 12:115–123
Revenue Canada (1970 through 1984 issues) Taxation statistics. Ottawa
Rosett R, Huang L (1973) The effect of health insurance on the demand for medical care. Journal of Political Economy 81:281–305
Queen's Printer (1970) Three task force reports on the cost of health services in Canada. Ottawa
Schaafsma J, Snyder A (1981) The supply of Canadian physicians and per capita expenditures for their services. Inquiry 18:185–190
Scitovsky A, Snyder A (1972) Effects of co-insurance on physician utilization. Social Security Bulletin 35:3–19
Smith R, Miller M, Golliday F (1972) An analysis of the optimal use of inputs in the production of medical services. Journal of Human Resources 7:208–225
Statistics Canada (1976 through 1982 issues) Hospital annual statistics. Ottawa, Catalogue 83–232
Willensky GR, Rossiter LF (1983) The relative importance of physician-induced demand in the demand for medical care. Milbank Memorial Fund Quarterly/Health and Society 61:252–273
Author information
Authors and Affiliations
Additional information
The objective of this paper is to consider a more complex version of a demand function for physician manpower originally developed by myself in Malcolm C. Brown, Caring for Profit, The Fraser Institute, Vancouver, 1987. Because of the objective, there is a similarity between the focus of the paper and that of the book. However, the model developed in the paper is more complex, and the demand function following from this model is more fully evaluated empirically.
I would like to thank the referees for their extremely helpful comments, and The Fraser Institute for its support of research which laid the foundations for this study.
Rights and permissions
About this article
Cite this article
Brown, M.C. Empirical determinants of physician incomes — Evidence from Canadian data. Empirical Economics 14, 273–289 (1989). https://doi.org/10.1007/BF01972453
Received:
Revised:
Issue Date:
DOI: https://doi.org/10.1007/BF01972453