Customer Discrimination in the Market for Physicians in the USA

Abstract

In this paper I study the gender wage gap of self-employed physicians in the USA. The data from CTS Physicians survey show that self-employed female physicians earn 13% less than self-employed male physicians, but no such difference exists in the salaried sector. I develop a model of simultaneous wage determination in private practice and salaried sector in presence of customer discrimination. The model predicts that female physicians charge lower price than male physicians if there is customer discrimination in the market. The model also predicts adverse selection among male physicians in the hospital sector. Only the very low ability male physicians will work for hospitals who benefit from high ability female physicians in the workplace driving the wages up.