The paper calls into question the existence of a supply/demand curve and as such is relevant to all of your points. Supply/demand is not sufficient to describe elasticity of labor in all cases. For example, in the quoted article:
“…concludes that 'wage elasticity is unresponsive (or inelastic) and that very large increases in wages would be needed to induce even moderate increases in nurse labour supply', adding that the 'weak role of wage increases in promoting nurse supply is also supported by recent qualitative studies..”
I misread your original comment regarding uniqueness. I now understand what you meant. The situation for doctors in the U.S.:
It’s a field that requires highly motivated, highly intelligent people to go through the process. There is a high opportunity costs involved due to the 10 - 12 years of required training at little or no pay. A massive debt is incurred to become a doctor. The people entering the field have the talent and ability to do something else that has high pay or is otherwise rewarding.
As such, attracting people into the field must take into account the ability to service the debt. Suppose starting next year all graduating med students were forevermore saddled with a $1 million med school tax upon graduation in form of a debt to the Treasury at 5% interest. Salaries for incoming doctors would eventually have to rise to take this into account in order to attract talent. Clearly the large debt incurred in order to become a doctor has some effect on the salary necessary to attract talent.
It's not like schools decided to charge far beyond what anyone would pay, and later the wages rose to pay for that debt beyond what people could previously pay. It's more that as wages rose, due to demand, school increased prices to capture what the market would bear to provide those skills.
It’s the case that this model of how things work is too simplistic. There’s a dance between the different forces at play. Each of the forces involved evolves over time and they all adjust over time to each other. That is the proper modeling of such things.
>As such, attracting people into the field must take into account the ability to service the debt. Suppose starting next year all graduating med students were forevermore saddled with a $1 million med school tax upon graduation in form of a debt to the Treasury at 5% interest. Salaries for incoming doctors would eventually have to rise to take this into account in order to attract talent.
The easy way to conceptualize this is the waiting list for medschool.
Today the line is out the door and around the corner. As tuition goes up, the line will start shrinking. Only after the line is gone and fewer doctors are graduating will salaries start rising.
“…concludes that 'wage elasticity is unresponsive (or inelastic) and that very large increases in wages would be needed to induce even moderate increases in nurse labour supply', adding that the 'weak role of wage increases in promoting nurse supply is also supported by recent qualitative studies..”
I misread your original comment regarding uniqueness. I now understand what you meant. The situation for doctors in the U.S.:
It’s a field that requires highly motivated, highly intelligent people to go through the process. There is a high opportunity costs involved due to the 10 - 12 years of required training at little or no pay. A massive debt is incurred to become a doctor. The people entering the field have the talent and ability to do something else that has high pay or is otherwise rewarding.
As such, attracting people into the field must take into account the ability to service the debt. Suppose starting next year all graduating med students were forevermore saddled with a $1 million med school tax upon graduation in form of a debt to the Treasury at 5% interest. Salaries for incoming doctors would eventually have to rise to take this into account in order to attract talent. Clearly the large debt incurred in order to become a doctor has some effect on the salary necessary to attract talent.
It's not like schools decided to charge far beyond what anyone would pay, and later the wages rose to pay for that debt beyond what people could previously pay. It's more that as wages rose, due to demand, school increased prices to capture what the market would bear to provide those skills.
It’s the case that this model of how things work is too simplistic. There’s a dance between the different forces at play. Each of the forces involved evolves over time and they all adjust over time to each other. That is the proper modeling of such things.
reply