On the Sorting of Physicians Across Medical Occupations

38 Pages Posted: 10 Dec 2008

See all articles by Pascal Courty

Pascal Courty

University of Victoria; European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR)

Gerald Marschke

University at Albany - Department of Economics; National Bureau of Economic Research; Institute for the Study of Labor (IZA); Harvard Law School, Labor & Worklife Program

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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.

Keywords: performance measurement, moral hazard, incentives, matching, pre-matching investment, career choice, medical specialization

JEL Classification: D82, I10, J31, J33, L23

Suggested Citation

Courty, Pascal and Marschke, Gerald R. and Marschke, Gerald R., On the Sorting of Physicians Across Medical Occupations. IZA Discussion Paper No. 3862, Available at SSRN: https://ssrn.com/abstract=1312608 or http://dx.doi.org/10.2139/ssrn.1312608

Pascal Courty (Contact Author)

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Gerald R. Marschke

University at Albany - Department of Economics ( email )

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