Input and technology choices in regulated industries
Subtitle: evidence from the health care sector
By: Daron Acemoglu, Amy Finkelstein
Contributors: National Bureau of Economic Research
Series: NBER working paper series -- working paper 12254; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 12254.
Publisher: National Bureau of Economic Research
Published: 2006
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] :
Description: "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 aects 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"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 6/1/2006.

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.