DO DOCTORS INDUCE DEMAND?

Abstract

This paper examines supply-induced demand in medicine using an exogenous income shock to obstetricians and gynaecologists caused by a declining number of births in their practice location from 1989 to 1999. The results of the present study indicate some evidence of induced demand. A 4.1 percentage point increase in Caesarean section procedures is found for a one unit decline in the birth rate per 100 population. Interestingly, people commence prenatal care statistically significantly earlier with fertility decline and, subsequently, the total number of prenatal care visits has been increased. However, I found no evidence of declining fertility inducing excessive prenatal care visits.