WHAT FACTORS INFLUENCE THE EARNINGS OF GENERAL PRACTITIONERS AND MEDICAL SPECIALISTS? EVIDENCE FROM THE MEDICINE IN AUSTRALIA: BALANCING EMPLOYMENT AND LIFE SURVEY

To date, there has been little data or empirical research on the determinants of doctors' earnings despite earnings having an important role in influencing the cost of health care, decisions on workforce participation and labour supply. This paper examines the determinants of annual earnings of general practitioners (GPs) and specialists using the first wave of the Medicine in Australia: Balancing Employment and Life, a new longitudinal survey of doctors. For both GPs and specialists, earnings are higher for men, for those who are self‐employed and for those who do after‐hours or on‐call work. GPs have higher earnings if they work in larger practices, in outer regional or rural areas, and in areas with lower GP density, whereas specialists earn more if they have more working experience, spend more time in clinical work and have less complex patients. Decomposition analysis shows that the mean earnings of GPs are lower than that of specialists because GPs work fewer hours, are more likely to be female, are less likely to undertake after‐hours or on‐call work, and have lower returns to experience. Roughly 50% of the income gap between GPs and specialists is explained by differences in unobserved characteristics and returns to those characteristics. Copyright © 2011 John Wiley & Sons, Ltd.