Physician labor supply: Do income effects matter?

Abstract

This paper estimates a model of physician labor supply, focusing on the impacts of wage and non-wage income. We find evidence of significant income effects. For male physicians, the income effect of a wage change on labor supply is negative, with an elasticity of -0.26. The pure substitution effect of a wage change increases labor supply: a 1% increase in wages leads to a 0.49% increase in labor supply, controlling for income effects. The results also suggest that the labor supply decisions of females are more responsive to variations in their earnings than are those of males. © 1994.