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The Impact of Liability on the Physician Labor Market

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  • Eric Helland
  • Mark H. Showalter

Abstract

This study examines the impact of malpractice reforms on physician behavior using a new measure of liability risk and a nationally representative, individual-level data set on physician behavior. We match our liability measure to data on physician behavior from the Physician Practice Costs and Income Survey (PPCIS). Data from the PPCIS bracket a period of substantial state-level legal reform between 1983 and 1988, which provides identifying variation in our liability measure. We estimate the impact of liability reform on hours worked. We find an estimated elasticity of hours worked to liability exposure of - .285 for the full sample of physicians. The effect for physicians ages 55 or older is much larger: we find an elasticity of - 1.224 for this category. We find that an increase in $1 of expected liability is associated with a $.70-$1.05 increase in malpractice premiums. (c) 2009 by The University of Chicago. All rights reserved.

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  • Eric Helland & Mark H. Showalter, 2009. "The Impact of Liability on the Physician Labor Market," Journal of Law and Economics, University of Chicago Press, vol. 52(4), pages 635-663, November.
    • Handle: RePEc:ucp:jlawec:v:52:y:2009:i:4:p:635-663
    DOI: 10.1086/597427
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    1. Hsueh-Hsiang Li & Alexandra Bernasek, 2018. "Tort Reforms and the Gender Distribution of Physicians," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 44(3), pages 437-454, June.
    2. Hyman, David A. & Silver, Charles & Black, Bernard & Paik, Myungho, 2015. "Does tort reform affect physician supply? Evidence from Texas," International Review of Law and Economics, Elsevier, vol. 42(C), pages 203-218.
    3. Matter, Ulrich & Stutzer, Alois, 2015. "Politico-economic determinants of tort reforms in medical malpractice," Working papers 2015/02, Faculty of Business and Economics - University of Basel.
    4. Eric Helland & Anupam B. Jena & Dan P. Ly & Seth A. Seabury, 2016. "Self-insuring against Liability Risk: Evidence from Physician Home Values in States with Unlimited Homestead Exemptions," NBER Working Papers 22031, National Bureau of Economic Research, Inc.
    5. Dove John A. & Dove Laura R., 2020. "US State Tort Liability Reform and Entrepreneurship," Review of Law & Economics, De Gruyter, vol. 16(3), pages 1-45, November.
    6. Anca Cotet, 2009. "Tort Reform and the Demand for Medical Care: Evidence from State-by-State Variation in Non-Economic Damages Caps," Working Papers 200901, Ball State University, Department of Economics, revised Mar 2010.
    7. Helland, Eric & Seabury, Seth A., 2015. "Tort reform and physician labor supply: A review of the evidence," International Review of Law and Economics, Elsevier, vol. 42(C), pages 192-202.
    8. Paul Heaton, 2017. "How Does Tort Law Affect Consumer Auto Insurance Costs?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(2), pages 691-715, June.
    9. Eric Langlais & Andreea Cosnita-Langlais, 2022. "Endogenous market structures, product liability, and the scope of product differentiation," Working Papers hal-04159801, HAL.
    10. Klick, Jonathan & MacDonald, John, 2020. "Deterrence and liability for intentional torts," International Review of Law and Economics, Elsevier, vol. 63(C).
    11. Eric Helland & Darius Lakdawalla & Anup Malani & Seth A Seabury, 2020. "Unintended Consequences of Products Liability: Evidence from the Pharmaceutical Market [“An Economic Analysis of Mary Carter Settlement Agreements,”]," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 36(3), pages 598-632.
    12. Charles L. Baum, 2020. "The effects of medical malpractice tort reform on physician supply an analysis of legislative changes from 2009 to 2016," Southern Economic Journal, John Wiley & Sons, vol. 87(2), pages 540-575, October.
    13. Lakdawalla, Darius N. & Seabury, Seth A., 2012. "The welfare effects of medical malpractice liability," International Review of Law and Economics, Elsevier, vol. 32(4), pages 356-369.
    14. Matter, Ulrich & Stutzer, Alois, 2016. "The role of party politics in medical malpractice tort reforms," European Journal of Political Economy, Elsevier, vol. 42(C), pages 17-35.
    15. Peter Chinloy & Daniel Winkler, 2011. "Contracts, Labor Supply and Income Targeting," Journal of Labor Research, Springer, vol. 32(2), pages 113-135, June.

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