Let’s look at some data on average annual physician earnings in the US compared to other countries:
- US: $458,100
- Canada: $194,700
- Netherlands: $185,700
- Sweden: $115,200
Why are American physicians’ incomes so high compared to other developed countries? Is it a good idea to try to reduce physicians’ income?
An NBER working paper by Buehler et al. (2026) aim to answer this question. Rather than focusing on absolute income, the authors focus on where physicians’ earnings place them in their country’s income distribution. They find that:
First, in all four countries, physician is a common high-income occupation. Some physicians rank below the top two earners nationally. Second, the US mass in the top two percent is particularly high. Physicians in Canada and the Netherlands are somewhat less concentrated in the top percentile; Their distribution percentiles show greater mass, from 70 to 95. About 19% of Canadian and Dutch physicians are in the top percentile, with the majority in the top decile. In these countries, a meaningful share of physicians are located lower in the income distribution than in the US. The Swedish distribution appears to differ from the other three countries, as only 5% of Swedish physicians are in the top percentile of the Swedish income distribution. More Swedish physicians fall into the 80th–94th percentile than other countries.
So incomes are higher in the US but most of that is because of higher incomes overall. However, physicians in the US are more likely to be among the top percentage of earners than the other three countries. What happens if we adjust the US percentage income distribution compared to other countries? When recalculated, it explains at most 22% of the difference in physician income between the US and other countries.
Another reason American physicians earn more is that there are relatively more specialists than primary care physicians (PCPs):
…The concentration of physicians at the top of the income distribution is more pronounced for specialists than for physicians overall. In contrast, for primary care physicians, percentiles 60–94 have a greater mass. In the US, 42% of experts are in the top percentile of the national income distribution. Combined with the 98th percentile, more than half of American experts are in the top 2%. Canadian and Dutch experts are also prominent at the top, with more than one-quarter of Canadian experts and more than one-fifth of Dutch experts in the top percentile.
In short, why is America’s income higher? First, people in the US earn more and the US wage distribution is more rightly skewed than that of other countries. Second, there are relatively more specialists in the US than PCPs. Third, professional opportunities (e.g., practice ownership, entrepreneurial activities) are also likely to be greater in the US. Fourth, institutional conditions probably matter. The US is a more decentralized system; In contrast, the authors wonder whether the low wages of Swedish physicians are due to the predominance of salaried, public sector healthcare employment and the government’s use of monopoly power.
Throughout the interesting paper. You can read the full paper here. You can also see a summary of Alex Taborok’s paper on marginal revolution.
