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Workforce Impacts of Subsidised Mental Healthcare: Evidence on Supply, Earnings, and Geographic Distribution

Author

Listed:
  • Nicole Black

    (Centre for Health Economics, Monash Business School, Monash University)

  • Anthony Harris

    (Centre for Health Economics, Monash Business School, Monash University)

  • David W. Johnston

    (Centre for Health Economics, Monash Business School, Monash University)

  • Trong-Anh Trinh

    (Centre for Health Economics, Monash Business School, Monash University)

Abstract

To improve access to affordable mental healthcare, Australia introduced a national, publicly-funded program in 2006 to subsidise psychological services, which were previously privately funded. Theory suggests that by increasing demand, subsidies should incentivise providers to expand supply, either by entering the workforce or by increasing hours. However, expansion depends on supply constraints, particularly in non-metropolitan areas with pronounced workforce shortages. This study examines the program’s effects on the size, work hours, demographic composition, earnings, and location of practising psychologists. Using a difference-in-differences approach with census data and Australian Tax Office records, we find that the program: (1) increased the supply of practising psychologists by 47% within five years, with minimal effect on average hours worked per psychologist; (2) raised psychologists’ annual personal incomes by 17%; and (3) increased the likelihood of psychologists working in non-metropolitan areas by 8%, supporting broader access to mental healthcare.

Suggested Citation

  • Nicole Black & Anthony Harris & David W. Johnston & Trong-Anh Trinh, 2024. "Workforce Impacts of Subsidised Mental Healthcare: Evidence on Supply, Earnings, and Geographic Distribution," Papers 2024-17, Centre for Health Economics, Monash University.
    • Handle: RePEc:mhe:chemon:2024-17
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    References listed on IDEAS

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    More about this item

    Keywords

    Psychologist; Mental Healthcare; Better Access Initiative; Health Workforce;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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