The Impact of Liability on the Physician Labor Market

Medical Malpractice Reform and Physicians in High‐Risk Specialties

“…In fact, if we borrow a calculation from Kessler, Sage, and Becker (2005), it would take a 22 percent increase in doctors' wages to generate a supply response comparable to the response generated by the passage of a cap on noneconomic damages. 13 Furthermore, since this result represents only the effect on the extensive (entry/exit) margin, it is likely to be the lower bound of the true total effect of caps, given Helland and Showalter's (2006) results regarding the intensive (hours worked) margin.…”

“…Although most of these studies point in a similar direction (that is, at least some medical malpractice reforms increase physician supply in at least some underserved communities), all suffer from potential endogeneity, with the exception of Helland and Showalter (2006). That is, if states tend to pass reforms when doctors are particularly numerous (and, therefore, politically powerful) or when state residents have a particularly high demand for medical services, the positive relationship between reform and physician supply is biased upward.…”

“…This somewhat conflicts with the indirect results on physician supply described by Dubay, Kaestner, and Waidmann (2001), who found that expectant mothers have greater access to prenatal care when liability exposure is low. Helland and Showalter (2006), using an approach similar to the one we implement here, examined the intensive margin of physician labor supply. They found that damage caps induce physicians to work more hours in a year, and the effect is statistically significant.…”

The role of party politics in medical malpractice tort reforms

“…Klick and Stratmann (2007) show, using a tripledifferences design to capture potential endogeneity of the passage of medical malpractice reforms, that caps on non-economic damages positively affect the number of doctors in high-risk specialties in a state. Additionally, Helland and Showalter (2009) find evidence that an increase in expected liability costs is associated with a decrease in a physician's hours worked. Rubin and Shepherd (2007) study the impact of different types of tort reforms on non-motor-vehicle accidental death rates and present significant positive as well as negative effects, depending on the type of tort reform.…”

Data Watch: Tort-uring the Data

“…The number of filings, for example, increased dramatically in the 1980s before declining again in the 1990s (National Center for State Courts, 2001), and at the same time, the number of trials has been declining (Galanter, 2004;Hadfield, 2004). 2 Numerous econometric methods exist for dealing with this sample selection problem, but all require data on various stages of litigation (for example, Priest and Klein, 1984;Eisenberg, 1990;Waldfogel, 1995;Farber and White, 1994). Kessler and Rubinfeld (2004) survey empirical studies of litigation.…”