Income effects and physician labour supply: evidence from the threshold system in Ontario
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.
Document Type: Research Article
Affiliations: Ontario Medical Association
Publication date: November 1, 2008