On the Sorting of Physicians Across Medical Occupations

35 Pages Posted: 25 Nov 2008 Last revised: 18 Aug 2022

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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Date Written: November 2008

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 and Marschke, Gerald R. and Marschke, Gerald R., On the Sorting of Physicians Across Medical Occupations (November 2008). NBER Working Paper No. w14502, Available at SSRN: https://ssrn.com/abstract=1305512

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