Bernard Fortin

Bernard Fortin, Département d’économique, Université Laval, CRREP, CIRANO and IZA. 

Title: Physicians’ Response to Incentives: Evidence on Hours of Work and Multitasking

Abstract: We measure the response of physicians to monetary incentives using administrative data on Quebec specialists. Our data contain information on the different services provided by individual physicians, their hours worked and on the relative price of each service. These data cover a period during which the Quebec government changed the relative prices paid for medical services. We develop a multitasking model to estimate the manner in which physicians reacted to these price changes. Optimal behaviour within our model implies a wage index that determines the marginal return to clinical hours worked when those hours are optimally distributed across services. This index, in turn, generates an earnings equation which we estimate using both limited and full-information methods. Our results confirm that physicians respond to incentives in predictable ways. The own-price substitution effects of a price change are both economically and statistically significant. Income effects are present, but small for individual services. They are more important in the presence of broad-based fee increases which can lead to physicians reducing the supply of services.

co-authors: Bruce Shearer and Nibene Habib Somé.