Markets for medical care and medical education: an integrated long-run structural approach

This paper investigates the relationship between the market for medical care and the market for medical education. Within a standard supply and demand framework, the capacity of medical schools is considered as an endogenous element within a complete structural system of the market for physicians' services. The parameters of the model are estimated using data from the postwar period. The estimated system is then simulated both to compare it to alternative time-series forecasting approaches and to examine the nature of earnings cycles in medicine. The results of this exercise support the applicability of traditional economics to this sector of the economy.