The Earnings and Labor Supply of U.S. Physicians*.

This article examines how government health care policies influence physicians' earnings, labor supply, and the allocation of talent across specialties in the United States. Using linked administrative data—including tax returns, Medicare billing, and physician registries—it finds that physicians earn an average of $350,000 annually, accounting for 8.6% of national health care spending, with substantial variation by specialty, geography, and firm size. The study shows that government insurance expansions and Medicare reimbursement rates significantly affect physicians’ incomes, work effort, retirement timing, and specialty choice, with higher payments attracting more highly qualified physicians to better-compensated specialties. Additionally, geographic differences in Medicare payments contribute to unusual earnings patterns, such as higher physician pay in lower-income rural areas. The findings highlight the central role of government payment rules and entry restrictions in shaping top incomes and talent allocation within the medical profession, suggesting that health policy is a powerful driver of income inequality and labor market outcomes among physicians.