Volume 32, Number 1 (Winter) 1997
Thornton, James, and B. Kelly Eakin. 1997. "The Utility Maximizing Self-Employed Physician." Journal of Human Resources 32(1):98-128.
We estimate a model of utility-maximizing physician behavior. Our model accounts for the interdependence of physician input, output, and work/leisure choices, and includes an endogenous virtual wage for physician own time in the medical practice. We find that solo practitioners respond to increases in marginal hourly earnings and nonpractice income by allocating less time to medical practice activities. Our results also suggest that fee reductions induce the substitution of physician own time for auxiliaries, and the net effect of this adjustment is reduced patient loads and a decrease in supply from the existing stock of solo practitioners.
James Thornton is an associate professor of economics at Eastern Michigan University. B. Kelly Ea-kin is a senior economist at Christensen Associates in Madison, Wisconsin. The authors thank two anonymous referees for comments and suggestions that improved the paper significantly. The data used in this article can be obtained beginning in June 1997 through May 2000 from James Thornton, Department of Economics, Eastern Michigan University, Ypsilanti, MI 48197, or B. Kelly Eakin, Christensen Associates, 4610 University Ave., Suite 700, Madison, Wl 53705.
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