Transcript
Chapter 16 – Health Care Labor Markets and Professional Training
Key Ideas
An efficient allocation of labor equates the marginal product of labor to the wage rate. If this is not the case, then we are wasting resources.
The more educated the individual, the higher the marginal product, and the higher the wage.
Human capital follows many of the same analyses as health capital (from chapter 7). Someone who invests in human capital foregoes current consumption with the aim of increasing future consumption.
Planning and projection of health manpower needs often does not address potential technological change, or the opportunities for substitution.
The control of medical education determines the supply of physicians and the costs of medical care. Kessel views the legacy of the 1910 Flexner report as consolidating monopoly power for physicians, but there are other competing hypotheses.
If there is monopoly power, one might expect to see monopoly (greater than needed to induce entry) rents. Most studies, at least those through the 1980s, have found medicine to be “financially attractive.”
Teaching Tips
Ask students about marginal product of labor for physicians, and for others both inside and outside the health economy. Does this explain why physicians have been very highly paid since the end of World War II.
Explore the concept of opportunity cost. What are the opportunity costs of education? of medical training?
Compare ease of entry into the medical school market, which requires millions of dollars of facilities, affiliation with hospitals, and sizable full-time staffs, with the law school market, or the driver-education school market. This may explain why physician supply is so slow to adjust.
Ask students what they think about licensing physicians, lawyers, beauty shop operators, and other people who provide services. Do these licensures increase the quality of the services? What other impacts do these licensing rules have?
Chapter 16 – Labor Markets and Professional Training
In 2009 approximately ______ percent of the labor force was employed in health services sites.
7.
11.*
15.
24.
Which of the following statements is true about major medical professional categories since 1970?
The number of physicians has had the highest rate of increase.
The number of dentists has had the highest rate of increase.
The number of registered nurses has had the greatest rate of increase.*
The number of optometrists has had the greatest rate of increase.
Which of the following statements is false?
The demand for labor is a derived demand.
If the marginal revenue product is greater than the wage, a firm should hire more workers.
If the marginal product of a lab technician is 10 lab tests, and the price per lab test is $50, the lab technician’s marginal revenue product is $500.
The labor demand curve, which equals price times average product, is downward sloping.*
Refer to Table E16.1 below. If the wage rate is $90 per day, this firm will hire ______ workers.
2.
3*.
4.
5.
Table E16.1
Total Full-time Workers Total Product
(lab tests per day)
Price Per Lab Test
0 0 25
1 5 25
2 12 25
3 16 25
4 19 25
5 21 25
Refer to Table E16.1. If the wage rate rises to $110 per day, this firm will hire ______ workers.
2.*
3.
4.
5.
Refer to Table E16.1. If the wage rate is $110 per day, but the price is now $30 per test, this firm will hire ______ workers.
1.
2.
3.*
4.
Refer to Table E16.1. If new computers double workers’ productivities, at a wage of $100 per day, employers will:
hire no more workers.
raise their employees’ wages.
hire roughly twice as many workers.*
lower the prices of their lab tests.
In a labor market, which of the following will occur if labor demand and supply simultaneously increase?
An increase in equilibrium wages and ambiguous change in the equilibrium quantity of labor.
An ambiguous change in equilibrium wages and equilibrium quantity of labor.
An ambiguous change in equilibrium wages and an increase in the equilibrium quantity of labor.*
A decrease in equilibrium wages and an increase in the equilibrium quantity of labor.
In a labor market, which of the following will occur if labor demand increases and supply decreases?
An increase in equilibrium wages and ambiguous change in the equilibrium quantity of labor. *
An ambiguous change in equilibrium wages and equilibrium quantity of labor.
An ambiguous change in equilibrium wages and an increase in the equilibrium quantity of labor.
A decrease in equilibrium wages and an increase in the equilibrium quantity of labor.
Human capital investment refers to
on-the-job-training.
schooling.
learning by doing.
all of the above.*
Table 16-1 suggests that if the marginal product per dollar of physicians is lower than practical nurses, we should:
hire more physicians, because they are more productive.
hire more practical nurses because their marginal productivity per dollar is higher.*
hire more of each because they have positive marginal productivity per dollar.
hire fewer of each to lower costs.
Table 16-1 suggests that that relative to ________, practices were hiring too many ______.
registered nurses; technicians.
practical nurses; technicians.
technicians; practical nurses.
Answers (a) and (b) are correct.*
Suppose that improvements in X-ray technology make radiologists 20 percent more productive, and that their salaries increase 50 percent. We can say that:
a dynamic shortage is occurring because it takes time to train more radiologists.*
the radiologists are acting as monopolists.
the radiologists are overpaid.
Answers (a) and (b) are correct.
Many studies indicate that physicians are ________ nurses, which indicates the marginal product per dollar for nurses is ________ than physicians.
underutilizing; greater.*
underutilizing; less.
overutilizing; greater.
overutilizing; less.
The problem with need-based approaches to manpower planning is that it
does not allow for substitution of medical inputs.
holds technological change constant.
assumes physicians can determine the needs of the population.
all of the above.*
Adams County has 100,000 residents. During any given year 2 percent of the population will develop a medical condition that requires 14 hours of physician treatment. Assuming the average physician works 2000 hours per year, how many physicians are needed in Adams County?
6.
12.
14.*
20.
Hamilton County has 200,000 residents. During any given year 1 percent of the population will develop a medical condition that requires 10 hours of physician treatment. Assuming the average physician works 2000 hours per year, how many physicians are needed in Hamilton County?
6.
10.*
14.
20.
In the question above, suppose that planners expect the Hamilton County population to double in the next 20 years, and also that physicians will become 10% more productive. Continue to assume that during any given year 1 percent of the population will develop a medical condition that now requires 10 hours of physician treatment. Assuming the average physician works 2000 hours per year, how many physicians will be needed in Hamilton County?
6
12
18*
24
Refer to Figure E16.1. In a competitive market, employers will hire ____ units of labor and pay a wage of ____.
20; 50
50; 20*
60; 15
40; 30
Refer to Figure E16.1. This monopsony will hire _____ units of labor and pay a wage of _______.
40; 15.*
40; 30.
50; 20.
60; 15.
W MLC
S
D
L
40 50 60
In Figure E16.1, if a union organizes the nurses and negotiates a $20 per hour wage, monopsonist’s equilibrium wage bill will ______ from _____ to _____.
fall; $1200; $900.
fall; $1200; $1000
rise; $600; $1000.*
not change; $1,000; $1,000
In Figure E16.1, if the market wage is set at $15 per hour:
there will be excess supply of nurses.
there will be an excess demand for nurses.*
regulation will increase the supply of nurses.
None of the above are true.
Consider the following chart regarding a medical school.
Total Cost $90 million
Cost if school provided only patient care 40 million
Cost if school produced only education 60 million
The “pure cost” of patient care is ______, the “pure cost” of education is _____, and the joint costs are _______.
$50 million; $30 million; $10 million.
$40 million; $40 million; $10 million.
$30 million; $30 million; $30 million.
$30 million; $50 million; $10 million.*
Consider the following chart regarding a medical school.
Total Cost $90 million
Cost if school provided only patient care 40 million
Cost if school produced only education 60 million
In a given state, students are supposed to pay the pure costs of their education, and patients are expected to pay the full costs of their care. The hospital will:
break even because all costs are being covered.
run a profit because they will be receiving more than the total costs.
will run a deficit, because $10 million in joint costs are not being covered.*
will run a deficit because $90 million in joint costs are not being covered.
Price discrimination means that:
two economically similar individuals pay different prices for the same services.*
African-Americans get different services than do Caucasians.
women wait longer for treatment than do men.
Answers (b) and (c) are correct.
Price discrimination can occur because:
patients have their care paid for by insurers.
providers can determine patients’ willingness to pay for care.
patients cannot “resell” their health care.
Answers (b) and (c) are correct.*
Many studies have found that physicians earn economic rents, payments over and above those necessary to induce them to provide their services. Which of the following statements does not characterize this type of market?
there is free entry into and exit from this labor market.*
physicians are often rewarded for their activity as self-employed entrepreneurs.
physicians may enjoy some monopoly power.
economic rents for the physicians have often exceeded those accruing to dentists or to lawyers.
Regulators and advocates argue that licensure is appropriate because it:
ensures that patients get high quality care.
increases remuneration to those with the licenses.
reduces the incidence of deficient care.
Answers (a) and (c) are correct.*
Among the reasons Bhattacharyya uses to explain wide variations across specializations are:
differences in hours worked.*
discrimination in favor of men over women.
differences in regional location.
higher prestige among certain specializations.
Suppose that in a given specialty, the men leaving residency programs earn 15 percent more than do the women, controlling for hours worked, age, practice type, and employer location. This evidence would be consistent with an explanation that:
the men are more productive.
the women are trading wages for some unmeasured work- and family-flexibility factors.
employers are practicing wage discrimination against women.
Answers (a), (b), and (c) are correct.*
