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Income effects and physician labour supply: evidence from the threshold system in Ontario

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We examine a reform to the physician threshold system in Ontario that provides a unique opportunity to assess the effect of fee changes on physician behaviour, free from the biases that potentially affect simple time-series or cross-section inference. We find that: (1) the income effects of fee changes are small, but significant; (2) the income effect dominates the substitution effect only for a minority of services with relatively low prices and high volumes; and (3) the cross effects of fee changes tend to be significant only for services with relatively high prices and low volumes.
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Keywords: I12; I18

Document Type: Research Article

Affiliations: Ontario Medical Association

Publication date: 2008-11-01

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