Webinar: Joshua Gottlieb, University of Chicago

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Melbourne Institute Seminar Series

Title: Who Values Human Capitalists' Human Capital? The Earnings and Labor Supply of U.S. Physicians

Abstract: Is government guiding the invisible hand at the top of the labor market? To study this question among physicians---the most common occupation among the top one percent of income earners---we link the administrative registry of all physicians in the U.S. with tax data, Medicare billing records, and survey responses. We measure physician earnings and use several quasi-experimental empirical strategies to estimate the influence of government payments on physicians’ incomes and labor supply. We find a major role for government on the margin, with half of direct changes to government reimbursement rates flowing directly into physicians' incomes. These policies move physicians' relative and absolute incomes more than any reasonable changes to marginal tax rates could.  Higher fees increase work hours and treatments for Medicare patients, and decrease retirement.  We conclude that government plays a major role in determining the value of physicians' human capital, but it is unrealistic to use this power to reduce healthcare spending substantially.

Presenter: Joshua Gottlieb, University of Chicago

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