‘Improving the Distribution of Quality in Health Provision: Two Incentive Reforms in Peru’s Healthcare System’ with José Flor-Toro

We examine the labor supply decisions of healthcare providers and their consequences in Peru. The Peruvian government implemented two incentive reforms to attract more and better providers to health centers serving poorer, rural populations thereby ameliorating the conditions of a large sector characterized by staff shortages and inequitable supply. Using two regression discontinuity designs, we find that career incentives are able to attract significantly more skilled physicians to the targeted areas but are almost ineffective for nurses; the opposite is true for monetary incentives, which attract more skilled nurses to the neediest areas. Differences in career trajectories and lifetime income likely explain the different reactions to incentives of physicians and nurses. Healthcare utilization and perceived quality of received services are not positively impacted, which could be due to (unobserved) effort or other characteristics of the providers most likely to respond to the incentives.

*Draft available upon request.