Demographic and Geographic Determinants of Regional Physician Supply

Against the backdrop of an ongoing debate in most countries about the geographic (mal-)distribution of physician practices, we develop a theoretical and empirical framework to analyze how physician supply at regional level depends on demographic (population size, age struc- ture, fertility and migration) and geographic determinants. Particular attention is given (i) to local population change as a predictor of fu- ture demand for physician services, (ii) to the way in which the age- structure of the (potential patient) population and regional structure interact in shaping the pro…tability of treating the local population, and (iii) to cross-regional correlations in physician supply. Using re- gional data for Germany, we examine econometrically the determinants of regional physician supply. We …nd it to be negatively related to both the population share 60+ and the population share 20- in rural areas. While both population shares tend to have a less negative impact in urban areas, a pronounced positive e¤ect arises only for the share 20- in regions with agglomeration character. Net migration and natural balance turn out to be signi…cant positive as long-run determinants only, indicating thus their role as predictors of future demand. On av- erage, cross-regional spillovers in demand do not seem to be important determinants of regional supply.