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Abstract: Delivering health and other public services to remote areas of developing countries is perhaps one of the greatest challenges facing poor countries that aspire to reach the Millennium Development Goals. This paper uses a newly collected dataset on Ethiopian physicians to shed light on issues of rural physician labor supply, including the dynamics of career evolution, and the efficiency of the physician labor market. We use a lottery mechanism employed to assign medical school graduates to their first jobs to identify the long-term impact of initial postings to rural areas, and examine the performance of the physician labor market born of that lottery mechanism. We find that high-ability physicians opt out of the lottery and find assignments in Addis Ababa, the capital, through the market where they successfully seem to compete for specialization training with physicians assigned to Addis through the lottery. We also find evidence suggesting that the lottery, by explicitly randomly assigning new graduates, obfuscates information about them that future employers would otherwise find valuable. High ability workers from the lottery do relatively worse later in their careers than their counterparts who did not take part in the lottery, and are more likely to exit the physician labor market in Ethiopia.
*The Massachusetts Avenue Development Seminar (MADS) series is an effort by the Center for Global Development and The Paul H Nitze School of Advanced International Studies to take advantage of the incredible concentration of great international development scholars in the Metro Washington, DC area. The series seeks to bring together members of this community and improve communication between them.