The Determinants of Physicians’ Location Choice: Understanding the Rural Shortage

44 Pages Posted: 12 Dec 2019 Last revised: 2 Jan 2021

See all articles by Elena Falcettoni

Elena Falcettoni

Board of Governors of the Federal Reserve System

Date Written: 2018

Abstract

A long-standing challenge in the US health care system is the provision of medical services to rural areas. This paper develops a structural spatial equilibrium model with heterogeneous physicians and uses it to explore the impact of policies, namely loan forgiveness and salary incentives, on the geographical distribution of physicians. I collect micro data from physicians’ directories on their medical school, residency, and first-job choices and use this new dataset to both allow for physicians’ preference to remain close to their residency location and to implement an instrumental-variable approach to overcome endogeneity issues caused by the correlation between wages and unobserved amenities. I find that residents strongly prefer remaining close to their residency location. The combination of loan forgiveness and salary incentives has led to 1.2 percent more physicians choosing rural areas. Using the government spending currently allocated to loan forgiveness to further increase salary incentives would lead to 6 times more primary care physicians choosing rural areas and a higher average quality of rural physicians compared to the impact of current policies.

Keywords: rural physicians, healthcare, shortage, primary care, specialists, loan forgiveness

JEL Classification: I11, I14, R11, R23

Suggested Citation

Falcettoni, Elena, The Determinants of Physicians’ Location Choice: Understanding the Rural Shortage (2018). Available at SSRN: https://ssrn.com/abstract=3493178 or http://dx.doi.org/10.2139/ssrn.3493178

Elena Falcettoni (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

HOME PAGE: http://www.elenafalcettoni.com

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
322
Abstract Views
1,135
Rank
175,504
PlumX Metrics