Too Few Doctors or Too Low Wages? Labor Supply of Health Care Professionals in China

Posted: 6 Jan 2013

See all articles by Xuezheng Qin

Xuezheng Qin

Peking University - School of Economics

Lixing Li

Peking University - China Center for Economic Research (CCER)

Chee-Ruey Hsieh

Academia Sinica - Institute of Economics

Date Written: March 5, 2013

Abstract

This paper estimates the labor supply functions for health care professionals in China using Census-based data in 2005. The rapid economic growth and population aging in China led to a substantial increase in the demand for health care services and the derived demand for health care professionals in recent years. However, the increase in the supply of doctors and nurses lags behind the growth in demand, raising the question of whether the excess demand should be met by expanding the health care manpower or by inducing the existing personnel to work more hours through wage increase. Our findings indicate that wage rate adjustment has a significant impact on the length of working time among the self-employed practitioners (with an estimated short-run elasticity of 0.575), while the labor supply of hospital employees is inelastic due to their fixed payment scheme. Instead, hours worked in the employee group are related to non-wage factors such as asset holdings and the hospital ownership type. An important policy implication of our study is that adjustments of labor compensation methods and hospital ownership structure are potentially effective approaches for coping with the excess demand for health care professionals and improving the quality of health care in China.

Keywords: Health care professionals, Labor supply, Wage elasticity, China

JEL Classification: I11, J44

Suggested Citation

Qin, Xuezheng and Li, Lixing and Hsieh, Chee-Ruey, Too Few Doctors or Too Low Wages? Labor Supply of Health Care Professionals in China (March 5, 2013). China Economic Review, Vol. 24, No. 1, 2013. Available at SSRN: https://ssrn.com/abstract=2196797

Xuezheng Qin

Peking University - School of Economics ( email )

Beijing
China

Lixing Li

Peking University - China Center for Economic Research (CCER) ( email )

Beijing, 100871
China

Chee-Ruey Hsieh (Contact Author)

Academia Sinica - Institute of Economics

128 Academia Road, Section 2
Nankang
Taipei, 11529
Taiwan

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