Health Employment, Medical Spending, and Long-term Health Reform*

Abstract

This paper explores the relationships between the growth in the medical workforce in an aging society and employment in other sectors of the economy, based on data from the United States since 1985. Employment in medical services grew, but did not displace employment in other sectors uniformly. Instead, regression analysis shows that medical workforce growth produced contemporaneous reductions in relative employment in the manufacturing, construction, and information sectors, while being associated with growth in other services and public administration. Import penetration and productivity growth mattered, but much of the displacement remains even after controlling for these factors. JEL-Code: I100. Mark V. Pauly Health Care Management Department The Wharton School University of Pennsylvania 3641 Locust Walk, Room 208 USA – Philadelphia, PA 19104 pauly@wharton.upenn.edu Anand Saxena Health Care Management Department The Wharton School University of Pennsylvania 3641 Locust Walk USA – Philadelphia, PA 19104 ansaxena@sas.upenn.edu This draft: August 1, 2011 Paper Presented at April, 2011, CESifo Area Conference on Public Sector Economics Munich, Germany.