Essays on physician self-employment

Augustine D Faucher, University of Pennsylvania

Abstract

Chapter 1 investigates why female physicians have a lower self-employment rate than male physicians. A model of self-employment choice is developed, based on earnings and non-pecuniary factors available in the self-employment and wage-salary; sectors. Five models that predict different self-employment behavior between the sexes are compared within this model: four discrimination models and a compensating differentials model. These models are tested using data on young physicians. Women's self-employment earnings are approximately 15% lower than men's, controlling for observable factors; the sexes have equal wage-salary earnings. Controlling for the higher opportunity cost women face entering self-employment, men and women have equal self-employment rates. The empirical results are not consistent with any of the models tested: none adequately explains the lower self-employment earnings of women relative to men. Chapter 2 presents an alternative model of self-employment choice, based on income, leisure and non-pecuniary characteristics available in the self-employment and wage-salary sectors. Hours worked can vary, and a capital investment is necessary in self-employment, but not the wage-salary sector; the self-employment choice may depend on the marginal rate of substitution of leisure for income. In self-employment, but not in the wage-salary sector, hours worked should be positively associated with computed hourly earnings because of the capital cost. If women work fewer hours in self-employment than men they may appear to have lower hourly earnings; if hours worked are controlled for, however, men and women should have equal computed self-employment earnings. This model is tested using the physician data set. Individuals appear to choose the sector with greater income, but there is no evidence they choose the sector with greater leisure. Hours worked positively affect computed hourly earnings in self-employment, but not in the wage-salary sector; these results support the model. Self-employed men and women have equal computed hourly earnings after controlling for the fewer hours women work; this result is very different from Chapter 1 and is consistent with the model presented here. Women work fewer hours than men, and are significantly less likely to base their sector choice decision on earnings.

Subject Area

Labor economics|Womens studies

Recommended Citation

Faucher, Augustine D, "Essays on physician self-employment" (1996). Dissertations available from ProQuest. AAI9627916.
https://repository.upenn.edu/dissertations/AAI9627916

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