Do Dutch dentists extract monopoly rents?

Nadine Ketel*, Edwin Leuven, Hessel Oosterbeek, Bas van der Klaauw

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

We exploit lottery-determined admission to dental school to estimate the payoffs to the study of dentistry in the Netherlands. Using data from up to 22 years after the lottery, we find that in most years after graduation dentists earn around 50,000 Euros more than they would earn in their next-best profession. The payoff is larger for men than for women but does not vary with high school GPA. The large payoffs cannot be attributed to longer working hours, larger investments while studying (opportunity costs and direct costs), or unpleasant aspects of working as a dentist. A plausible explanation is that dentists earn a monopoly rent. Results from regressions of dentists’ earnings on dentists density are consistent with this, as are the facts that the supply of dentists in the Netherlands is low and that the payoff does not vary with high school GPA.

Original languageEnglish
Pages (from-to)145-158
Number of pages14
JournalJournal of Health Economics
Volume63
DOIs
Publication statusPublished - 1 Jan 2019

Keywords

  • Admission lotteries
  • Dentists
  • Medical labor markets
  • Monopoly rents
  • Occupational licensing

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