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Economic Incentives in Health Manpower Policy

Policymakers have evidenced continued concern with the issue of maldistribution of physicians among specialties and locations. Many of the recent policy proposals in this area have involved increasing the financial rewards to primary care specialization and to location of practice in underserved areas. This article examines the evidence on current economic incentives to specialize and to locate, including income and the hours of work needed to produce income. Findings suggest that current distributions of physicians among locations and specialties are more consistent with a decision to minimize hours worked, rather than an income maximization rule. Policy implications are discussed with respect to potentially perverse results which may occur if consideration is not given to this aspect of career decisions.