Medical Labour Supply and the Production of Healthcare

Abstract

Medical labour markets are important because of their size and the importance of medical labour in the production of healthcare and in subsequent patient outcomes. We present a summary of important trends in the UK medical labour market, and we review the latest research on factors that determine medical labour supply and the impact of labour on patient outcomes. The topics examined include: the responsiveness of labour supply to changes in wages, regulation and other incentives; factors that determine the wide variation in physician practice and style; and the effect of teams and management quality on patient outcomes. This literature reveals that while labour supply is relatively unresponsive to changes in wages, medical personnel do react strongly to other incentives, even in the short run. This is likely to have consequences for the quality of care provided to patients. We set out a series of unanswered questions in the UK setting, including: the importance of non‐financial incentives in recruiting and retaining medical staff; how individuals can be incentivised to work in particular specialties and regions; and how medical teams can be best organised to improve care.

Measuring physicians' response to incentives: Labour supply, multitasking and earnings

“…The point estimates are $$$ - $$$0.118, for physicians providing services 1 and 2, and $$$ - $$$0.116, for physicians providing services 1 and 3. This result is consistent with the consensus view that physicians' labour supply is highly inelastic in response to wage changes (for a recent review of the literature, see Lee et al, 2019). This should not come as a surprise because physicians are generally at the top level of income and work a high number of hours per week, making the value of additional leisure very high.…”

Labour supply, service intensity, and contracts: Theory and evidence on physicians

“…In the face of ageing population and rising demand for healthcare, improving knowledge of physicians' labour supply is a crucial research issue for policy makers and economists. While the literature on this topic has grown rapidly in recent years (see the survey by Lee et al 2019), a number of important issues are still to be addressed. Physicians can affect their output at work through two basic margins (see McGuire, 2000): their hours spent seeing patients and their volume of services provided per hour (or service intensity).…”

Do Non-Monetary Interventions Improve Staff Retention? Evidence from English NHS Hospitals

“…The responsiveness of labor supply to the non-financial aspects of job quality is especially pertinent in public sector occupations, where large workforces combined with budget constraints limit the potential for wage increases. In addition, workers with mission-driven preferences may value the di↵erent facets of jobs di↵erently compared to those in the private sector (Besley and Ghatak, 2005;Ellingsen and Johannesson, 2008;Brekke and Nyborg, 2010;Lee et al, 2019). With this study, we evaluate the e↵ectiveness of changing the non-pecuniary aspects of public-sector jobs on a large scale, by exploiting a labor market policy aimed at decreasing the turnover of nurses working in all public hospitals in England.…”

“…A possible strategy to improve retention is to increase wages. However, as reviewed in Lee et al (2019), the empirical literature supports a limited role for wages to increase labor supply among nurses.…”