Does the market value racial and ethnic concordance in physician-patient relationships?

Objective. To determine if the market-determined earnings per hour of physicians is sensitive to the degree of area-level racial/ethnic concordance (ALREC) in the local physician labor market. Data Sources. 1998-1999 and 2000-2001 Community Tracking Study Physician Surveys and Household Surveys, 2000 U. S. Census, and the Area Resource File. Study Design. Population-averaged regression models with area-level fixed effects were used to estimate the determinants of log earnings per hour for physicians in a two-period panel (N=12,886). ALREC for a given racial/ethnic group is measured as the percentage of physicians who are of a given race/ethnicity less the percentage of the population who are of the corresponding race/ethnicity. Relevant control variables were included. Principal Findings. Average earnings per hour for Hispanic and Asian physicians varies with the degree of ALREC that corresponds to a physician's race/ethnicity. Both Hispanic and Asian physicians earn more per hour in areas where corresponding ALREC is negative, other things equal. ALREC varies from negative to positive for all groups. ALREC for Hispanics is negative, on average, due to the small percentage of the physician workforce that is Hispanic. This results in an average 5.6 percent earnings-per-hour premium for Hispanic physicians. However, ALREC for Asians is positive, on average, due to the large percentage of the physician workforce that is Asian. This results in an average 4.0 percent earnings-per-hour discount for Asian physicians. No similar statistically significant results were found for black physicians. Conclusions. The market-determined earnings per hour of Hispanic and Asian physicians are sensitive to the degree of ALREC in the local labor market. Larger sample sizes may be needed to find statistically significant results for black physicians.