Do Dutch dentists extract monopoly rents?

Area of Science:

• Economics
• Health Economics
• Education Policy

Background:

• Estimating the economic returns to higher education is crucial for informed career and policy decisions.
• The field of dentistry presents a unique case due to its specific training pathways and market structures.

Purpose of the Study:

• To quantify the financial payoffs associated with pursuing a career in dentistry in the Netherlands.
• To investigate factors influencing these payoffs, such as gender and academic background.

Main Methods:

• Utilizing a natural experiment: lottery-based admissions to dental school in the Netherlands.
• Analyzing longitudinal data spanning up to 22 years post-graduation.
• Employing regression analysis to examine earnings and dentist density.

Main Results:

• Graduates in dentistry earn substantially more, approximately €50,000 annually, compared to their next-best career alternatives.
• The earnings premium is more pronounced for male dentists and shows no correlation with high school GPA.
• Higher dentist density is associated with lower earnings, supporting the monopoly rent hypothesis.

Conclusions:

• The study provides robust evidence of significant economic returns to dental education in the Netherlands.
• Findings suggest that dentists may benefit from monopoly rents, as indicated by low supply and earnings independent of prior academic achievement.
• Policy implications may involve considering market regulation and its impact on professional earnings.