Measuring Physicians' Response to Incentives: Evidence on Hours Worked and Multitasking

53 Pages Posted: 11 Jun 2018

See all articles by Bruce Shearer

Bruce Shearer

Université Laval - Département d'Économique; IZA Institute of Labor Economics

Nibene Somé

University of Western Ontario

Bernard Fortin

Université Laval - Département d'Économique; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Abstract

We measure the response of physicians to monetary incentives using matched administrative and time-use data on specialists from Québec (Canada). These physicians were paid fee-for-service contracts and supplied a number of different services. Our sample covers a period during which the Québec government changed the prices paid for clinical services. We apply these data to a multitasking model of physician labour supply, measuring two distinct responses. The first is the labour-supply response of physicians to broad-based fee increases. The second is the response to changes in the relative prices of individual services.Our results confirm that physicians respond to incentives in predictable ways. The own-price substitution effects of a relative price change are both economically and statistically significant. Income effects are present, but are overridden when prices are increased for individual services. They are more prominent in the presence of broad-based fee increases. In such cases, the income effect empirically dominates the substitution effect, which leads physicians to reduce their supply of clinical services.

Keywords: physician labour supply, multitasking, incentive pay

JEL Classification: I10, J22, J33, J44

Suggested Citation

Shearer, Bruce and Somé, Nibene and Fortin, Bernard, Measuring Physicians' Response to Incentives: Evidence on Hours Worked and Multitasking. IZA Discussion Paper No. 11565, Available at SSRN: https://ssrn.com/abstract=3193319 or http://dx.doi.org/10.2139/ssrn.3193319

Bruce Shearer (Contact Author)

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada
418-656-2131 (Phone)
418-656-7798 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Nibene Somé

University of Western Ontario

1151 Richmond Street
Suite 2
London, N6A 5B8
Canada

Bernard Fortin

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada
418-656-5678 (Phone)
418-656-7798 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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