Input and Technology Choices in Regulated Industries
Evidence from the Health Care Sector
Bibliographic Data
| ID | 10170922 |
|---|---|
| Authors | Daron Acemoglu (0000-0003-0908-7491), Amy Finkelstein (0000-0002-9941-6684) |
| Year | 2008 |
| Volume | 116 |
| Issue | 5 |
| Pages | 837-880 |
| Publication date | 2008-10-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/595014 |
| OpenAlex | W2891715444 |
| Language | EN |
| Citations received | 20 |
| References cited | 24 |
This paper examines the implications of regulatory change for the input mix and technology choices of regulated industries. We present a simple neoclassical framework that emphasizes the change in relative factor prices associated with the regulatory change from full cost to partial cost reimbursement, and investigate how this affects firms ’ technology choices through substitution of (capital embodied) technologies for tasks previously performed by labor. We examine these implications empirically by studying the change from full cost to partial cost reimbursement under the Medicare Prospective Payment System (PPS) reform, which increased the relative price of labor faced by U.S. hospitals. Using the interaction of hospitals ’ pre-PPS Medicare share of patient days with the introduction of these regulatory changes, we document a substantial increase in capital-labor ratios and a large decline in labor inputs associated with PPS. Most interestingly, we find that the PPS reform seems to have encouraged the adoption of a range of new medical technologies. We also show that the reform was associated with an increase in the skill composition of these hospitals, which is consistent with technology-skill or capital-skill complementarities
Business · Capital (architecture · Economic growth · Economics · Health care · Labour economics · Macroeconomics · Monetary economics · Payment · Prospective payment system · Reimbursement · Relative price · Technological change · Finance · Global Health Care Issues · Healthcare Policy and Management
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| Unique citing works | 20 |
|---|---|
| Citations per year | 1,25 |
| Citation span | 2010 - 2026 (17) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 20 |