"A Discrete Choice Analysis of Norwegian Physicians' Labor Supply and Sector Choice"

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What is the effect of increased wages on physician's working hours and sector choice? This study applies an econometric framework that allows for non-convex budget sets, non-linear labor supply curves and imperfect markets with institutional constraints. The physicians are assumed to make choices from a finite set of job possibilities, characterized by practice form, hours and wage rates. The individuals may combine their main position with an extra job, opening for a variety of combinations of hours in the respective jobs. The author take into account the complicated payment schemes for physicians, taxes and household characteristics when estimating labor supply on Norwegian micro data. The results show a modest response in total hours to a wage increase, but a reallocation of hours in favor of the sector with increased wages.