expected way to their wage premium—they are 127 percent more likely than white doctors to enter the IM subspecialties. Finally, black radiologists earn 19 per-
cent more than white radiologists, while other race radiologists earn 6 percent less than white radiologists. Again despite this wage premium, blacks are less likely to
enter radiology than whites and in accord with the wage premium, other race doctors are a little less likely than white doctors to enter radiology.
There are at least two competing explanations for the evidence on racial differences in wages across the specialties: group differences in practice style within specialties,
or racial discrimination in the physician labor market. Disentangling these explana- tions is difficult without further evidence, but given the fact that black doctors on aver-
age earn higher wages than doctors of all other races including whites in IM Subspecialties and Radiology, and doctors of other races earn more than whites in
four of the five specialty categories, racial discrimination seems unlikely, at least without further auxiliary and possibly ad hoc assumptions.
I turn next to gender differences: male doctors earn between 8 percent and 13 per- cent more than female doctors in all of the specialty branches, save FP, where female
doctors earn 8 percent more.
27
Female medical graduates react to these earnings dif- ferences by picking surgery and radiology as specialties at lower rates than men and
FP at higher rates. However, women are more likely than men to pick IM and IM sub- specialties. If discrimination against female physicians is the cause of the wage dif-
ferences in these specialties, such a finding that women preferentially enter these specialties would be odd. In IM and IM subspecialties, discrimination again seems
an unlikely explanation for observed wage differences, though such a conclusion remains open in Surgery and Radiology.
B. Other Determinants of Equilibrium Wage Setting
Graduates of U.S. medical schools USMGs earn 6 percent less than FMGs in each of the generalist specialties, earn 20 percent more in surgery, and earn roughly the
same amount in the remaining specialties. Perhaps not surprisingly, FMGs are more likely than USMGs to enter FP and IM, and 31 percent less likely to enter surgery. If
there is discrimination here, it is taking place at the practice level, not at the residency selection level. Furthermore, if such discrimination handicaps FMGs in surgery, it
handicaps USMGs in the generalist specialties. As before, these results do not rule out nondiscriminatory explanations.
Age at graduation has important effects on specialty selection. Compared with 35- year-old medical school graduates, doctors who enter medicine ten years earlier are
6 percent and 7 percent less likely to choose the generalist specialties FP or IM respectively, 15 percent less likely to pick Radiology, and 211 percent and 280 per-
cent respectively more likely to choose Surgery or IM Subspecialties; the latter two Bhattacharya
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27. Baker 1996, using the same YPS 1991 dataset, argues that much of the wage differences between male and female doctors can be explained by differences in specialty choices—males differentially enter the high-
income specialties like surgery. My results are consistent with his findings in the sense that the magnitudes of the male-female wage differences are smaller if they are conditioned on specialty selection. However, my
results suggest that some small male-female differences remain even within specialties.
specialties require the longest training periods. Longer training periods apparently deter newly minted, but older, MDs.
28
Though the malpractice coefficient reported in the specialty selection models is common across all specialty branches, the model allows changes in malpractice risk
within a specialty to affect specialty selection probabilities as long as those changes are not common across specialties. However, the results imply that doubling mal-
practice risk within a specialty has a near zero effect on all specialty selection proba- bilities. In some sense, this is not particularly surprising, since the existence of
insurance markets against malpractice risk should blunt the effect of such risk on spe- cialty choice. This result should be of some policy interest since some have implicated
increases in malpractice risk as a cause of specialist shortages.
29
My results indicate that if this conclusion is true, the mechanism cannot be that malpractice risk deters
young doctors from entering high risk professions. Finally, though mothers’ and fathers’ education is sometimes statistically signifi-
cant in predicting wages, the qualitative directions of these effects show no obvious pattern except that they are all small.
C. Model Validity Checks
