Bruce Shearer’s research while affiliated with Université Laval and other places

Physicians are typically paid for services completed. Yet, they provide different types of services with different prices, introducing a multitasking element to their labour‐supply decisions. We show that optimal behaviour generates a maximum earnings function in which earnings depend on prices and total hours worked. Estimation by limited‐information methods identifies a lower bound to the own‐price substitution effect of a price change. Full‐information methods identify the full response to incentives, including income effects. We illustrate these methods on a sample of specialist physicians working in Québec, Canada. Our results suggest that the own‐price substitution effects of a price change are both economically and statistically significant. Income effects are present but overridden when prices increase for individual services. In contrast, in the presence of broad‐based fee increases, the income effect dominates the substitution effect, which leads physicians to reduce their supply of services.

I use a quasi experiment, conducted in the field, to evaluate how the workers of an economic firm responded to threats to cut their piece rates. During the study, the piece rate paid to workers was initially set above the regular rate, given working conditions. In a commitment treatment this high rate was paid without any threat of revision. During a non‐commitment trial, the high rate was accompanied by a threat from management to reduce the rate if, after two days of work, average earnings were too high. The empirical results display strong ratchet effects. Workers withheld output by 16% under non‐commitment relative to commitment. The firm eventually reduced the piece rate from the initial high rate, but left it above the regular rate, giving workers the possibility to extract rents. Workers showed no tendency to restrict output during this phase of the study.

Based on linked administrative and survey panel data, we analyze the labour supply behaviour of physicians who could adopt either a standard fee-for-service contract or a mixed remuneration (MR) contract. Under MR, physicians received a per diem and a reduced fee for services provided. We present estimates of a structural discrete choice model that incorporates service intensity (services provided per hour) and contract choice into a labour supply framework. We use our estimates to predict (ex ante) the effects of contracts on physician behaviour and welfare, as measured by average equivalent variations. The supply of services is reduced under a MR contract, suggesting incentives matter. Hours spent seeing patients is less sensitive to incentives than the supply of services. Our results suggest that a reform forcing all physicians to adopt the MR system would have substantially larger effects on physician behaviour than were measured under the observed reform. A pure salary (per diem) reform would sharply reduce services but would increase time spent seeing patients.

Based on linked administrative and survey panel data, we analyze physicians who could adopt either the standard fee-for-service contract or a mixed remuneration (MR) contract. Under MR, physicians received a per diem and a reduced fee for services provided. We estimate a structural econometric model that incorporates services per hour, and contract choice into the labour supply framework. We use our estimates to predict the effects of various policy-relevant contracts on physician behaviour. We find, among other things, that doctors reduce their service intensity under MR contracts. Their hours worked are less sensitive to incentives.

We conducted a series of field experiments to investigate the ability of experimentally measured risk preferences to predict the contractual choices of workers in the real labour market. In a first set of experiments we measured workers' risk preferences using the lottery approach of Holt and Laury (2002). We did this twice: once for low-stakes lotteries (LSL) and once for high-stakes (HSL). Each worker subsequently made 12 decisions, choosing between his/her regular piece-rate contract and a series of fixed wage contracts, each offereing a different fixed wage. One of the twelve decisions was then chosen at random and the worker was paid according to his/her choice for that decision over a period of two working days. The risk preferences measured from the HSL effectively predict the contract choices; those from the LSL are irrelevant. We also find that high-ability workers prefer piece-rate contracts. JEL Classification: C93, D86, J33.

We develop and estimate a structural model that incorporates service intensity and endogenous contract choice into the standard labour supply framework. We apply our model to data col- lected on specialist physicians working in Quebec (Canada). These physicians are typically paid a fee-for-service (FFS) contract. Our panel data set covers a period of policy reform which al- lowed physicians either to remain on FFS or to adopt a mixed remuneration (MR) contract, under which they receive a per diem as well as a reduced FFS. We estimate the preference parameters of physicians governing the choice of contract and their hours worked and services provided. We use our estimates to simulate labour supply elasticities, to predict (ex ante) the effects of contracts on physician behaviour, and to evaluate selection effects. The supply of services is reduced un- der a MR contract, suggesting incentives matter. The hours spent seeing patients is less sensitive to incentives than the supply of services. Our results suggest that a reform forcing all physicians to adopt the MR system would have had substantially larger effects on physician behaviour.