We measure the response of physicians to monetary incentives, using matched administrative and time-use data on specialists from Quebec who were paid fee-for-service. Our sample covers a period during which the government changed the prices paid for clinical services. We apply these data to a multitasking model of physician labour supply, measuring two responses: 1) the labour-supply response to broad-based fee increases; and 2) the response to changes in the relative prices of services. Our results confirm that physicians respond to incentives in predictable ways. In particular, we observe an increased provision of services for which the relative price increases. Also, in the presence of broad-based fee increases, the “income effect” dominates any “substitution effect”, leading physicians to reduce their overall supply of clinical services.
Measuring Physicians’ Response to Incentives: Evidence on Hours Worked and Multitasking
Nibene Habib Somé and Bernard Fortin